Relating To The Mortgage Interest Deduction.
If enacted, SB723 will have significant implications for property owners with second homes in Hawaii. By removing the mortgage interest deduction, these homeowners may face higher tax liabilities, which could deter investment in second properties. The bill's proponents argue that redirecting these funds towards the rental housing revolving fund will ultimately bolster housing availability and affordability for residents, thereby addressing issues related to housing shortages.
Senate Bill 723 is a legislative proposal aimed at modifying Hawaii's income tax law regarding mortgage interest deductions. The bill specifically seeks to eliminate the mortgage interest deduction for second homes. The motivation behind this change is to allocate the resultant savings directly into the state's rental housing revolving fund, which is intended to support initiatives related to rental housing development and affordability.
The discussion surrounding SB723 points to a notable division in opinions. Advocates for the bill argue that it encourages equitable use of tax revenues to assist families in need of housing support. However, opponents express concerns that this change could disproportionately affect middle-class families who own second homes, thus resulting in financial strain. Critics argue that the removal of such tax benefits may contribute to a disincentive for potential homebuyers or investors who play a role in the local economy.