On May 3, 2007, the Legislature passed Senate Bill No. 600 CD1. The bill would amend Hawaii Revised Statutes §235-7(a) by adding a new subsection (13) which would eliminate from taxable income 100% of the gain realized by a fee simple owner of the sale of a leased fee interest in a condominium, residential cooperative or planned community if it is sold to a condominium association or residential cooperative corporation. Although the bill states it applies to the leased fee interest for planned communities, it only applies if the leased fee interest is sold to a condominium or cooperative, not a planned community association. The exemption would apply to taxable years beginning after December 31, 2007, and ending prior to January 1, 2013. The bill could help convince lessors to agree to convert condominiums and cooperatives because they would not be taxed on the gain.

Act 166 effective 6/8/2007.

6/12/2007: Deleted, “The bill is awaiting the governor review.” and added provisions about Act 166.