Government Affairs Update
March 13, 2009
HAR INVOLVED IN UNPRECEDENTED NUMBER OF TAXATION RELATED BILLS
SB1346, General Excise Tax
Increases the general excise tax to fund public education; exempts groceries, certain medical expenses, and a portion of rent from the general excise tax; establishes a tax credit for volunteer services performed in public schools; increases the standard deduction; establishes an education funding commission to provide oversight for general excise tax revenues deposited into the newly created education special fund. (SD2)
Testimony: Click here
SB1277, Conveyance Tax
Increases conveyance tax on the sale of a condominium or single family residence for which the purchaser is ineligible for a county homeowner's exemption on the Real Property Tax from 35 cents per $100 (0.35%) to $8 per $100 (8%), an increase of 2,285%; and to increase the maximum Conveyance Tax rate on the sale of all other real property from 30 cents per $100 (0.30%) to $4 per $100 (4%), an increase of 1,333%.
Testimony: Click here
HB1405, General Excise Tax
Amends the definition of engaging in business under section 237-2, HRS (general excise tax), to include persons who enter into an agreement with residents of the State where the person pays a commission for referral of potential customers.
Testimony: Click here
HB1598, Tax on Improvements
Taxes a lessor of real property for capital improvements made by a lessee upon the termination of a lease.
Testimony: Click here
SB1106, HARPTA
Requires a nonresident buyer of real property located in Hawaii to furnish to the Bureau of Conveyances a Hawaii Real Property Tax Act (HARPTA) payment verification form issued from the department of taxation that certifies that the HARPTA withholding requirements were satisfied as a precondition to recording a change in title on the real property. Requires the seller to submit a certified tax clearance certificate as a condition to transferring real property title.
Testimony: Click here
SB1111, Transient Accomodation Tax
Increases the rate of the transient accommodations tax beginning on July 1, 2009, and requires the additional revenues collected from the increase to be deposited into the general fund. Effective 7/1/59.
(SD1)
Testimony: Click here
HB1548, General Excise Tax
Omnibus tax bill to provide tax equity and stimulate the economy by increasing general excise tax rates, reducing income tax rates, and establishing hotel construction and remodeling tax credit.
Testimony: Click here
HB1742, General Excise Tax
Repeals certain general excise and use tax excise exemptions and exclusions, but retains the exemption for nonprofit religious organizations. Reduces the tax rate on sales to the final consumer from 4% to 3.5%. Reduces also the public service company tax rate and repeals certain public service company tax exemptions. Subjects to the general excise tax certain sales of real property and sales of securities, commodity futures, and bonds. Makes conforming amendments to other laws.
Testimony: Click here
ACT 137
To address the unintended consequences of Act 137, Mortgage Rescue Fraud Prevention Act, HAR has worked with the Department of Commerce and Consumer Affairs (DCCA) since the passage of the Act. Together, HAR and DCCA agreed upon amendments to Act 137 that will exempt REALTORS® from the requirements of the Act, and impose additional requirements under the real estate licensing regulations, Hawai'i Revised Statutes Chapter 467. The result of this collaborative effort is HB 233 and SB 34.
Senate Bill 34, SD1, excludes licensed real estate brokers and salespersons from the definition of distressed property consultants in Act 137 and prohibits certain conduct relating to the acquisition of an ownership interest in any distressed property a licensee has listed for up to 365 days after that listing is terminated.
House Bill 233, HD1 is still alive and crossed over to the Senate on March 12 and is awaiting a hearing.
Act 228, also called the Historic Preservation Act, required all buildings 50 years or older to take costly archival quality photographs. To address the unintended consequences of this law the following bills are moving forward:
HB520 HD1 repeals the amendments made by Act 228, Session Laws of Hawaii 2008, which require the taking of photographs of actual or potential historic buildings before demolition, construction, or alteration of the buildings.
SB1672 SD1 allows required photographs submitted to the DLNR to be in any format, including electronic, when engaging in a demolition or major alteration of a historic building nominated or listed on the Hawai‘i or National register of historic places.
In fact, SB1672 is part of the Senate Majority Package.
Private Transfer Fees
Private transfer fees are deed restrictions imposed by an owner of real property, which require a fee to be paid to a specified individual or organization every time the property is sold within the defined time period. These fees currently range from .05 percent to 1.75 percent of the purchase price. Since this fee is part of a private transaction, there is no requirement that the proceeds of these fees be used to benefit the individual property or the neighborhood. There is no oversight to validate that these fees are being used for the purpose specified.
HAR recommended the enactment of legislation which would prohibit the use of deed restrictions as a vehicle to impose private transfer fees. HAR opposes private transfer fees because these fees decrease affordability, serve no public purpose, and provide no benefit to property purchasers or to the community in which the property is located.
HB874 HD2 and SB1241 SD2 are alive and both prohibit residential real property transfer fees required by a deed restriction or covenant, with certain exceptions.
HAR KEEPS PROACTIVE TO PROTECT REALTORS®
Unauthorized Practice of Law
As you may remember, the Hawai‘i State Bar Association’s proposed Unauthorized Practice of Law (UPL) changes would have prohibited REALTORS® from doing their duties covered under their license, such as negotiating on behalf of their client and drafting or even filling in Standard Form contracts. HAR’s effort to address the consequences of the original draft proposed by the Bar was fruitful and our suggested language was incorporated into the new updated UPL rules currently before the Supreme Court.
Pending and based on the outcome of the Supreme Court’s decision, legislation is alive and drafted for the 2010 session as a proactive measure. The bill would clarify the real estate salesperson and broker law to protect those licensed activities.