Kokua Line
Kokua Line
Rent tax legal only
if tenants agree to payQuestion: We are residents of Moanalua Hillside Apartments on top of Red Hill. Starting in December, we were told they will charge residents tax on the rent they pay. We were trying to contact state agencies to find if it is legal for the management/landlord to charge tenants tax on their rent. Can you look into this? They will be applying for city housing bond and those of us who don't qualify for the bond program will be charged tax.
Answer: A landlord is allowed to charge tax on rent, but only if the tenant is told about it in advance and agrees to it.
You should talk to management officials to find out exactly what the situation is now that the city has approved the issuance of a $55 million housing revenue bond for your development.
According to the state Landlord-Tenant Code, landlords may tack on "an amount equal to the landlord's general excise tax obligation" in addition to the base rent.
A landlord is obligated to pay an excise tax of 4 percent for rent because it is gross revenue.
"This cost may be added to the base amount, provided that the amount added and the percentage charged (no more than 4.166 percent) are stated and agreed to in the rental agreement," according to the code.
The bond you refer to, which prompted the possibility of the tax, was approved by the city on Oct. 1, said Kiran Polk, general manager of Moanalua Hillside Apartments.
That was why, in August and September, residents of your 700-unit complex were asked to fill out questionnaires/applications seeking to determine how many tenants might qualify as low- and moderate-income renters, she said.
Those who do qualify will "have a maximum cap on their rent." Basically, "with this program, we have affordable housing in the community," Polk said.
Although many tenants responded, some did not, so, "we did at one point say if they did not submit applications that they may have to pay an excise tax on monthly rent," she said.
"If we can't identify what category someone falls in, we have to assume that person is not in either (low or moderate income)," she said.
It wasn't just that management needed to know who might qualify for affordable housing, but it also means "a lot of benefits to the renter," she said. The housing bond has allowed the development to undergo "massive renovation."
The city is authorized to issue bonds to help make loans available to assist in "developing, constructing and providing housing for persons of low and moderate income." It approved the $55 million bond to help MHA Partners, LLC -- an affiliate of Moanalua Hillside Partners, LLC of Colorado -- to acquire and rehabilitate your rental housing development at Red Hill.
Toll-free numbers for IRS
The Internal Revenue Service now has two toll-free numbers to help small businesses and individual taxpayers. Small businesses, corporations, partnerships and trusts who need information or help preparing business returns should call 1-800-829-4933. Taxpayers seeking information on refunds can call 1-800-829-1954.
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Useful phone numbers
Got a question or complaint?
Call 529-4773, fax 529-4750, or write to Kokua Line,
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. As many as possible will be answered.
E-mail to kokualine@starbulletin.com