New taxes, tourism funding cuts among bills pushed through as legislature winds down

Several other tax bills remain unresolved near the end of the week, but lawmakers tentatively agreed Thursday to increase the state conveyance tax for some high-end home sales.

The latest draft of House Bill 58 would double the conveyance tax on sales of non-owner occupied homes worth more than $4 million, and triple the tax on the sale of homes worth more than $6 million.

The conveyance tax would be quadrupled on sales of non-owner occupied homes worth more than $10 million. For example, the state conveyance tax on the sale of a $10 million non-owner occupied home would increase from $100,000 today to $400,000 under HB 58.

However, state tax officials estimated Thursday the proposed tax increase would only raise an additional $2 million to $3 million a year for the state’s general treasury.

That’s because up to 60 percent of the conveyance tax revenue is automatically diverted into the state rental housing revolving fund to develop affordable rentals, and to the state land conservation fund to buy and preserve land.

The conveyance tax on home sales worth less than $4 million would be unaffected by the bill. HB58 now goes to the full House and Senate for further consideration and a final vote.

Lawmakers on Thursday also dropped a plan to expand the reach of the Hawaiʻi inheritance tax. Currently estates worth $5.49 million or less are exempt from the tax, and the Senate had proposed limiting that exemption to estates totaling $3.5 million or less.

Some advocates have argued in favor of that proposal as a way to shift more of the state tax burden to wealthier residents, but the estate tax language was dropped from HB58 on Thursday without any public discussion of why House and Senate negotiators were abandoning the idea.