Conveyance Tax Increase for Sellers of Luxury Homes on Oahu

UPDATE: The Governor Did Sign This Into Law.
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Yesterday, the Hawaii Legislature passed House Bill 1741 which (among many other things) aims to increase the conveyance taxes on the seller for the sale of properties priced at $2 Million and more. If Governor Lingle signs this bill, conveyance taxes will go from the current tiered structure, for owner-occupied homes, ranging from 10 cents to 30 cents per 100 dollars in purchase price:

OLD
10 cents per $100 - Property Price $0-$599,999 (15 cents for non-owner occupied)
20 cents per $100 - Property Price $600,000 - $999,999 (25 cents for non-owner occupied)
30 cents per $100 - Property Price $1M and up (35 cents for non-owner occupied)

to a new structure, that raises taxes to 50 cents to a dollar per $100, for owner-occupied purchases fo homes priced at $2M or more, and 60 cents to $1.25 for purchasers of these homes living elsewhere.

NEW
10 cents per $100 - Property Price $0-$599,999 (15 cents for non-owner occupied)
20 cents per $100 - Property Price $600,000 - $999,999 (25 cents for non-owner occupied)
30 cents per $100 - Property Price $1M - $1,999,999 (40 cents for non-owner occupied)
50 cents per $100 - Property Price $2 M - $3,999,999(60 cents for non-owner occupied)
70 cents per $100 - Property Price $4 M - $5,999,999(85 cents for non-owner occupied)
90 cents per $100 - Property Price $6 M - $9,999,999($1.10 for non-owner occupied)
$1 per $100 - Property Price $10 M and up ($1.25 cents for non-owner occupied)

So, for a $2 Million owner-occupied home the conveyance tax would increase $6,000 to $10,000, or 67%. For a non-ower occupied home of $2M the tax would increase from $7,000 to $12,000, or 71%.

For a $10 Million owner-occupied home the tax would increase from $30,000 to $100,000, or 233%. For a non-ower occupied home of $10M the tax would increase from $35,000 to $125,000, or 257%.

http://www.capitol.hawaii.gov/session2009/Bills/HB1741_sd1_.pdf

You may ask, why is the SELLER responsible for more taxes when the BUYER is an investor? Good question - that is a factor that Sellers may wish to consider and possibly, negotiate with an investor/buyer in a transaction.

Stay tuned to hear what happens.