The bill seeks to address the housing affordability crisis in Hawaii by incentivizing landlords to rent at lower rates to qualifying tenants. By implementing this tax credit, the legislation could potentially increase the supply of affordable rental units, helping to alleviate the financial burden on low-income families. Furthermore, it establishes a structured assessment involving licensed appraisers to ensure fair market values are considered, promoting transparency in the housing market.
SB1152 introduces a new tax credit specifically aimed at landlords who provide housing to low-income tenants in Hawaii. The bill allows a tax credit deductible from the taxpayer's net income tax liability, calculated at fifty percent of the difference between the annual lease rent collected and the appraised fair market rental value of the unit. This provision is targeted toward landlords who lease to eligible tenants earning no more than eighty percent of the area median income, thereby encouraging them to provide affordable housing options. The credit applies to certain housing units, specifically excluding those valued over $2 million.
While the bill is anticipated to foster improved accessibility to rental housing for low-income individuals, some opposition may arise regarding the implications for landlords operating in higher-value markets. Concerns could emerge about whether the tax credit sufficiently offsets the potential losses incurred from lower rental incomes, and whether it could lead to disparities in rental property management practices. Critics may also argue that reliance on tax incentives could divert attention from broader systemic issues related to housing supply and affordability.