Luxury home sales tax to fund affordable housing killed

Introduced by Sen. Stanley Chang, Senate Bill 362 would have doubled the conveyance tax rate on properties valued over $2 million dollars (not eligible for the county homeowner exemption), while introducing new brackets for extremely high-value home sales. The sale of houses valued at more than $26 million would be taxed at a top rate of 7.25 percent.

Of the revenue generated, 50 percent would go to a rental housing revolving fund, 10 percent would go toward a land conservation fund and 10 percent would fund homeless services. The bill would also have removed the caps on the amount of revenue that could go to those funds.

Kenna StormoGipson, of the Hawaiʻi Budget & Policy Center, emphasized that the bill was the “most popular housing measure of the session,” receiving more supportive testimony than any other housing-related bills.

“I think when dozens of individuals and organizations supporting affordable housing and homeless services show up and they aren’t given the opportunity of a hearing, it can undermine faith in the public process,” StormoGipson said.

The bill received strong support from affordable housing and homeless advocates on Kauaʻi. The Hawaiʻi Budget & Policy Center estimated an early draft of the bill would generate more than $2 million for homeless services on Kauaʻi.

Though he did not comment on SB362 specifically, since it did not pass through any of his committees, Kauaʻi state Rep. Luke Evslin emphasized the importance of a conveyance tax in a statement to The Garden Island.

“Not only can the conveyance tax be a powerful revenue source for affordable housing, but I think that a properly formatted progressive tax can discourage speculation in the housing market where homeowners are purchasing and selling homes as an investment rather than as a place to live,” he said.