Tax to fund affordable housing advances in state legislature

The bill increases the sales tax rate on properties valued at between $2 and $4 million from 0.6 percent to 1.2 percent of the sales price. Homes valued at between $4 and $6 million would see a jump from 0.85 to 1.7 percent, while homes between $6 and $10 million would increase from 1.1 to 2.2 percent.

Homes valued at more than $10 million would have the most substantial jump, from 1.25 to 2.5 percent. Certain sales, including those eligible for the county homeowners’ exemption, and those for affordable housing development, would be exempt from the tax.

Half the funding would be allocated for affordable housing development, while 10 percent would go into a land conservation fund. The rest would go into the state treasury.

SB678 would have increased the rates on the most expensive homes to 6 percent, and included smaller increases to lower-value homes. Progressive group Hawaiʻi Appleseed estimated the tax would generate $174 million for affordable housing and $2.1 million for homeless services on Kauaʻi.

“Allocating 10 percent of the conveyance tax to homeless services would be a critical step forward for the state to prevent homelessness and expand services to move people off our streets,” wrote Rob Van Tassell, president and CEO of Catholic Charities Hawaiʻi, in testimony submitted to the Senate Ways and Means Committee last month.