| 47 | | - | SECTION 1. The legislature finds that, in 2007, the legislature enacted Act 166, Session Laws of Hawaii 2007, that provided an income tax exemption of one hundred per cent of capital gains realized by a fee simple owner during taxable years 2008-2012 from the sale of a leased fee interest in units within a condominium project, cooperative project, or planned unit development to the association of apartment owners or residential cooperative corporations of the leasehold units. The purpose of the law was to encourage landowners to sell condominium lessees the fee interest in their units, and thereby promote the long-term stability in Hawaii's condominium housing market. Act 166, Session Laws of Hawaii 2007, sunset on December 31, 2012. The legislature finds that today, many condominium units are still held in leasehold. Accordingly, the purpose of this Act is to reestablish an income tax exemption of one hundred per cent of capital gains realized from sales of leased fee interest in condominium units, cooperative project, or planned unit development to association of apartment owners or residential cooperative corporations. SECTION 2. Section 235-7, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows: "(a) There shall be excluded from gross income, adjusted gross income, and taxable income: (1) Income not subject to taxation by the State under the Constitution and laws of the United States; (2) Rights, benefits, and other income exempted from taxation by section 88-91, having to do with the state retirement system, and the rights, benefits, and other income, comparable to the rights, benefits, and other income exempted by section 88-91, under any other public retirement system; (3) Any compensation received in the form of a pension for past services; (4) Compensation paid to a patient affected with Hansen's disease employed by the State or the United States in any hospital, settlement, or place for the treatment of Hansen's disease; (5) Except as otherwise expressly provided, payments made by the United States or this State, under an act of Congress or a law of this State, which by express provision or administrative regulation or interpretation are exempt from both the normal and surtaxes of the United States, even though not so exempted by the Internal Revenue Code itself; (6) Any income expressly exempted or excluded from the measure of the tax imposed by this chapter by any other law of the State, it being the intent of this chapter not to repeal or supersede any [such] express exemption or exclusion; (7) Income received by each member of the reserve components of the Army, Navy, Air Force, Marine Corps, or Coast Guard of the United States of America, and the Hawaii National Guard as compensation for performance of duty, equivalent to pay received for forty-eight drills (equivalent of twelve weekends) and fifteen days of annual duty, at an: (A) E-1 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2004; (B) E-2 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2005; (C) E-3 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2006; (D) E-4 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2007; and (E) E-5 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2008; (8) Income derived from the operation of ships or aircraft if the income is exempt under the Internal Revenue Code pursuant to the provisions of an income tax treaty or agreement entered into by and between the United States and a foreign country[[];[]] provided that the tax laws of the local governments of that country reciprocally exempt from the application of all of their net income taxes, the income derived from the operation of ships or aircraft that are documented or registered under the laws of the United States; (9) The value of legal services provided by a legal service plan to a taxpayer, the taxpayer's spouse, and the taxpayer's dependents; (10) Amounts paid, directly or indirectly, by a legal service plan to a taxpayer as payment or reimbursement for the provision of legal services to the taxpayer, the taxpayer's spouse, and the taxpayer's dependents; (11) Contributions by an employer to a legal service plan for compensation (through insurance or otherwise) to the employer's employees for the costs of legal services incurred by the employer's employees, their spouses, and their dependents; [and] (12) Amounts received in the form of a monthly surcharge by a utility acting on behalf of an affected utility under section 269-16.3; provided that amounts retained by the acting utility for collection or other costs shall not be included in this exemption[.]; and (13) One hundred per cent of the gain realized by a fee simple owner from the sale of a leased fee interest in units within a condominium project, cooperative project, or planned unit development to the association of apartment owners or the residential cooperative housing corporation of the leasehold units. For purposes of this paragraph: "Condominium project" shall have the same meaning as provided under section 514C-1; "Cooperative project" shall have the same meaning as provided under section 514C-1; "Fee simple owner" shall have the same meaning as provided under section 516-1; provided that "fee simple owner" shall include legal and equitable owners; "Leased fee interest" shall have the same meaning as provided under section 516-1; and "Legal and equitable owners" shall have the same meaning as provided under section 516-1." SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 4. This Act shall take effect on July 1, 2050, and shall apply to taxable years beginning after December 31, 2022, and ending prior to January 1, 2030; provided that on January 1, 2030, this Act shall be repealed and section 235‑7(a), Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act. |
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| 47 | + | SECTION 1. The legislature finds that, in 2007, the legislature enacted Act 166, which provided an income tax exemption of one hundred per cent of capital gains realized by a fee simple owner during taxable years 2008-2012 from the sale of a leased fee interest in units within a condominium project, cooperative project, or planned unit development to the association of apartment owners or residential cooperative corporations of the leasehold units. The purpose of the law was to encourage landowners to sell condominium lessees the fee interest in their units, and thereby promote the long-term stability in Hawaii's condominium housing market. Act 166, Session Laws of Hawaii 2007, sunset on December 31, 2012. The legislature finds that today, many condominium units are still held in leasehold. Accordingly, the purpose of this Act is to reestablish an income tax exemption of one hundred per cent of capital gains realized from sales of leased fee interest in condominium units, cooperative project, or planned unit development to association of apartment owners or residential cooperative corporations. SECTION 2. Section 235-7, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows: "(a) There shall be excluded from gross income, adjusted gross income, and taxable income: (1) Income not subject to taxation by the State under the Constitution and laws of the United States; (2) Rights, benefits, and other income exempted from taxation by section 88-91, having to do with the state retirement system, and the rights, benefits, and other income, comparable to the rights, benefits, and other income exempted by section 88-91, under any other public retirement system; (3) Any compensation received in the form of a pension for past services; (4) Compensation paid to a patient affected with Hansen's disease employed by the State or the United States in any hospital, settlement, or place for the treatment of Hansen's disease; (5) Except as otherwise expressly provided, payments made by the United States or this State, under an act of Congress or a law of this State, which by express provision or administrative regulation or interpretation are exempt from both the normal and surtaxes of the United States, even though not so exempted by the Internal Revenue Code itself; (6) Any income expressly exempted or excluded from the measure of the tax imposed by this chapter by any other law of the State, it being the intent of this chapter not to repeal or supersede any [such] express exemption or exclusion; (7) Income received by each member of the reserve components of the Army, Navy, Air Force, Marine Corps, or Coast Guard of the United States of America, and the Hawaii National Guard as compensation for performance of duty, equivalent to pay received for forty-eight drills (equivalent of twelve weekends) and fifteen days of annual duty, at an: (A) E-1 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2004; (B) E-2 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2005; (C) E-3 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2006; (D) E-4 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2007; and (E) E-5 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2008; (8) Income derived from the operation of ships or aircraft if the income is exempt under the Internal Revenue Code pursuant to the provisions of an income tax treaty or agreement entered into by and between the United States and a foreign country[[];[]] provided that the tax laws of the local governments of that country reciprocally exempt from the application of all of their net income taxes, the income derived from the operation of ships or aircraft that are documented or registered under the laws of the United States; (9) The value of legal services provided by a legal service plan to a taxpayer, the taxpayer's spouse, and the taxpayer's dependents; (10) Amounts paid, directly or indirectly, by a legal service plan to a taxpayer as payment or reimbursement for the provision of legal services to the taxpayer, the taxpayer's spouse, and the taxpayer's dependents; (11) Contributions by an employer to a legal service plan for compensation (through insurance or otherwise) to the employer's employees for the costs of legal services incurred by the employer's employees, their spouses, and their dependents; [and] (12) Amounts received in the form of a monthly surcharge by a utility acting on behalf of an affected utility under section 269-16.3; provided that amounts retained by the acting utility for collection or other costs shall not be included in this exemption[.]; and (13) One hundred per cent of the gain realized by a fee simple owner from the sale of a leased fee interest in units within a condominium project, cooperative project, or planned unit development to the association of apartment owners or the residential cooperative housing corporation of the leasehold units. For purposes of this paragraph: "Condominium project" shall have the same meaning as provided under section 514C-1; "Cooperative project" shall have the same meaning as provided under section 514C-1; "Fee simple owner" shall have the same meaning as provided under section 516-1; provided that "fee simple owner" shall include legal and equitable owners; "Leased fee interest" shall have the same meaning as provided under section 516-1; and "Legal and equitable owners" shall have the same meaning as provided under section 516-1." SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 4. This Act shall take effect upon its approval, and shall apply to taxable years beginning after December 31, 2022, and ending prior to January 1, 2030; provided that on January 1, 2030, this Act shall be repealed and section 235‑7(a), Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act. INTRODUCED BY: _____________________________ |
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| 50 | 50 | | |
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| 51 | 51 | | The legislature finds that today, many condominium units are still held in leasehold. Accordingly, the purpose of this Act is to reestablish an income tax exemption of one hundred per cent of capital gains realized from sales of leased fee interest in condominium units, cooperative project, or planned unit development to association of apartment owners or residential cooperative corporations. |
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| 52 | 52 | | |
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| 53 | 53 | | SECTION 2. Section 235-7, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows: |
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| 54 | 54 | | |
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| 55 | 55 | | "(a) There shall be excluded from gross income, adjusted gross income, and taxable income: |
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| 56 | 56 | | |
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| 57 | 57 | | (1) Income not subject to taxation by the State under the Constitution and laws of the United States; |
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| 58 | 58 | | |
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| 59 | 59 | | (2) Rights, benefits, and other income exempted from taxation by section 88-91, having to do with the state retirement system, and the rights, benefits, and other income, comparable to the rights, benefits, and other income exempted by section 88-91, under any other public retirement system; |
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| 60 | 60 | | |
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| 61 | 61 | | (3) Any compensation received in the form of a pension for past services; |
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| 62 | 62 | | |
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| 63 | 63 | | (4) Compensation paid to a patient affected with Hansen's disease employed by the State or the United States in any hospital, settlement, or place for the treatment of Hansen's disease; |
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| 64 | 64 | | |
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| 65 | 65 | | (5) Except as otherwise expressly provided, payments made by the United States or this State, under an act of Congress or a law of this State, which by express provision or administrative regulation or interpretation are exempt from both the normal and surtaxes of the United States, even though not so exempted by the Internal Revenue Code itself; |
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| 66 | 66 | | |
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| 67 | 67 | | (6) Any income expressly exempted or excluded from the measure of the tax imposed by this chapter by any other law of the State, it being the intent of this chapter not to repeal or supersede any [such] express exemption or exclusion; |
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| 68 | 68 | | |
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| 69 | 69 | | (7) Income received by each member of the reserve components of the Army, Navy, Air Force, Marine Corps, or Coast Guard of the United States of America, and the Hawaii National Guard as compensation for performance of duty, equivalent to pay received for forty-eight drills (equivalent of twelve weekends) and fifteen days of annual duty, at an: |
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| 70 | 70 | | |
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| 71 | 71 | | (A) E-1 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2004; |
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| 72 | 72 | | |
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| 73 | 73 | | (B) E-2 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2005; |
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| 74 | 74 | | |
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| 75 | 75 | | (C) E-3 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2006; |
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| 76 | 76 | | |
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| 77 | 77 | | (D) E-4 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2007; and |
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| 78 | 78 | | |
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| 79 | 79 | | (E) E-5 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2008; |
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| 80 | 80 | | |
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| 81 | 81 | | (8) Income derived from the operation of ships or aircraft if the income is exempt under the Internal Revenue Code pursuant to the provisions of an income tax treaty or agreement entered into by and between the United States and a foreign country[[];[]] provided that the tax laws of the local governments of that country reciprocally exempt from the application of all of their net income taxes, the income derived from the operation of ships or aircraft that are documented or registered under the laws of the United States; |
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| 82 | 82 | | |
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| 83 | 83 | | (9) The value of legal services provided by a legal service plan to a taxpayer, the taxpayer's spouse, and the taxpayer's dependents; |
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| 84 | 84 | | |
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| 85 | 85 | | (10) Amounts paid, directly or indirectly, by a legal service plan to a taxpayer as payment or reimbursement for the provision of legal services to the taxpayer, the taxpayer's spouse, and the taxpayer's dependents; |
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| 86 | 86 | | |
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| 87 | 87 | | (11) Contributions by an employer to a legal service plan for compensation (through insurance or otherwise) to the employer's employees for the costs of legal services incurred by the employer's employees, their spouses, and their dependents; [and] |
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| 88 | 88 | | |
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| 89 | 89 | | (12) Amounts received in the form of a monthly surcharge by a utility acting on behalf of an affected utility under section 269-16.3; provided that amounts retained by the acting utility for collection or other costs shall not be included in this exemption[.]; and |
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| 90 | 90 | | |
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| 91 | 91 | | (13) One hundred per cent of the gain realized by a fee simple owner from the sale of a leased fee interest in units within a condominium project, cooperative project, or planned unit development to the association of apartment owners or the residential cooperative housing corporation of the leasehold units. |
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| 92 | 92 | | |
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| 93 | 93 | | For purposes of this paragraph: |
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| 94 | 94 | | |
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| 95 | 95 | | "Condominium project" shall have the same meaning as provided under section 514C-1; |
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| 96 | 96 | | |
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| 97 | 97 | | "Cooperative project" shall have the same meaning as provided under section 514C-1; |
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| 98 | 98 | | |
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| 99 | 99 | | "Fee simple owner" shall have the same meaning as provided under section 516-1; provided that "fee simple owner" shall include legal and equitable owners; |
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| 100 | 100 | | |
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| 101 | 101 | | "Leased fee interest" shall have the same meaning as provided under section 516-1; and |
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| 102 | 102 | | |
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| 103 | 103 | | "Legal and equitable owners" shall have the same meaning as provided under section 516-1." |
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| 104 | 104 | | |
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| 105 | 105 | | SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. |
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| 106 | 106 | | |
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