Status on Leased Fee Conversion Tax Credit Bill

On April 6, 2005, I reported on a Senate Ways and Means Committee Hearing on bills relating to leased fee conversion tax credits. The committee passed out amended version of the bills and the bills will be going to conference committee.

HB 1554 SD2 This bill would exempt from taxation 50% of the income received from the sale to a lessee of the leased fee interest in a residential house lot or multi-family residential leasehold property, or to the association of apartment owners, residential cooperative, or planned community of the multi-family residential leasehold building. Since Honolulu repealed Chapter 38 providing for mandatory conversion of the leased fee interest in condominiums and residential cooperatives, the tax incentive would be a welcome change to the law which may remove one reason a lessor may be unwilling to sell the leased fee interest to the lessees. Unfortunately, the Senate reduced the amount that would be exempt from 75% to 50%. In addition, it inserted a defective effective date of July 1, 2050.

If you wish to make your comments known, you should contact Representative Ken Hiraki and Senator Ron Menor before the conference committee meets.