Affordable housing on Kahala Ave?

[808shooter]

Re: Affordable housing on Kahala Ave?

Maybe Kawamoto is trying to do some charity?

maybe but if he were doing charity, he'd have far better avenues available to him.

my bet is that he didn't like how a few upper crust kahala ave haoles talked about him or made comments about him and his houses in disrepair in kahala.

"oh yeah? you like complain? ok. i fix you up real good. you wait."

if anyone speaks japanese maybe you can translate. i bet this is what he was thinking a few months ago.

btw, not racial, just assuming that it's mostly rich mainland folks who don't live there all year that own those houses.

[1stwahine]

Re: Affordable housing on Kahala Ave?

maybe but if he were doing charity, he'd have far better avenues available to him.

my bet is that he didn't like how a few upper crust kahala ave haoles talked about him or made comments about him and his houses in disrepair in kahala.

Mr. Gensiro Kawamoto is not new to the State. That's the problem. He has a reputation of not completing his projects or end of his deals. The State is concern what will happen if he will once again abandon the families once he gets "tired" of his "project."

In his interview he expresses he wants big families that will have invite many over. For what "Party?" In today's Society ~ such luxury is not enjoyed because people are busy working to make ends meet. Those who party hearty are the ones who find themselves fast on the street.

He will hand pick his tenants. It is his honor to do so. I am happy for the families that will be chosen yet wonder if down the road it will be worse for them when and if Mr. Kawamoto suddenly becomes tired and says you gotta move out.

He is not a man to be trusted.

The State is absolutely correct to be concern for our citizens.

Just my opinion on Thanksgiving Morning.

Auntie Lynn

[GeckoGeek]

Re: Affordable housing on Kahala Ave?

In this scenario, Kawamoto is not "sheltering" or trying to reduce his taxable income because these folks are his tenants. No benefit to Kawamoto.

OK, what happens when someone wins the lottery? Or wins a car? They do pay taxes on it. So how is this different? Things don't have to make sense to be taxed. The IRS is not going to ignore the taxes because you "bought" the car for $1. They know that's totally inequitable and will ask for taxes to be paid. I think $150 for a $5000 place is likewise far enough out of kilter for the IRS to have interest in it. If it was $4000 for a $5000 place, they'd just say that's market value. But $150 is too far out.

[poinographer]

Re: Affordable housing on Kahala Ave?

Are you a tax lawyer, GeckoGeek? This sounds like pure speculation and doesn't even make much sense. A link to support this idea would help, because I don't think your argument is cutting it. Winning a tangible object like a car or cash, is quite different than RENTING a piece of property with no inherent right to ownership and no immediate resale value. Now, if the lucky folks selected as tenants decide to sub-let the rooms of the property for $1500/mo, then the government would get their piece of that action, for sure.

But, since you raised the issue, if the IRS wanted to decide what the "proper" rent for every piece of property is and thereafter allow those tenants being gouged to deduct the difference as a loss of income for the year, then I'm interested...

[Miulang]

Re: Affordable housing on Kahala Ave?

OK, what happens when someone wins the lottery? Or wins a car? They do pay taxes on it. So how is this different? Things don't have to make sense to be taxed. The IRS is not going to ignore the taxes because you "bought" the car for $1. They know that's totally inequitable and will ask for taxes to be paid. I think $150 for a $5000 place is likewise far enough out of kilter for the IRS to have interest in it. If it was $4000 for a $5000 place, they'd just say that's market value. But $150 is too far out.

Renters don't get any credits on their income tax forms anyway (only homeowners do), I don't see how it would make the tenants liable for any taxes in the first place. Now if Kawamoto was trying to find some tax benefit for himself, and if he did file in the State, he would still be liable for the property tax (which would be assessed based on its value, not what he bought it for or what he rented it out for). And he's paying a penalty anyway, because all his rental properties are not his primary residence. I don't think the Feds have granted him a 501(c)3 status for his "foundation" yet, so I'm sure he is taking a huge loss on this deal right now.

Hopefully, his renters won't trash the places and perpetuate the notion that poor people don't know how to take care of their belongings.

Miulang

[GeckoGeek]

Re: Affordable housing on Kahala Ave?

Are you a tax lawyer, GeckoGeek?

No, nor do I play one on TV. But I can (and do) file a 1040 long by myself.

Let me try and re-state the issue.

As far as I've know, the IRS is interested in taxing all income in any way shape or form. Is paying 3¢ on the $ a form of "income"? I think the answer would be very clear if the house was owned by the renter's employer.

But does the IRS really care where you get the income from? Nope. I'd have to look again, but I think you have to declare any gifts over a certain size. And that's basically what this looks to be - a gift. Yes, they pay for the gift, but anyone with half a brain knows this is not a equatable transaction any more then paying $3 to "buy" a $100 bill would be.

Any income, in goods or service (except for explicitly tax-free income) ka-ching! OK, a lot of little stuff they let slide. Either because they set a threshold or it's simply not cost efficient to get after it (so the Christmas presents you get are safe-within limits). But is $4,850/month "little"? That's more then most people make, and the IRS is most certainly interested in that.

As for how Kawamoto deals with it in his taxes or what his reasons are, I don't give a flying fig. That's his problem. What I'm asking is how will the IRS look at this families' tax return?

So, to put it very simply: Does this meet IRS criteria of receiving a $4,850/month gift? Because gifts are taxable. And this is been rather public. IRS have to know about it.

[GeckoGeek]

Re: Affordable housing on Kahala Ave?

Renters don't get any credits on their income tax forms anyway (only homeowners do), I don't see how it would make the tenants liable for any taxes in the first place.

It's not about credits. It's all about income in the way of money, goods or services.

[Miulang]

Re: Affordable housing on Kahala Ave?

The way I read the IRS rules on gifts, it says each person can receive up to $12k tax-free every year. So for the first family of 6 that's scheduled to move into one of Kawamoto's residences, that means an exemption of $72k every year. If the going rate for rentals in that area is $5k/mo, that would equal only $60k in "gifts". But is this really a "gift" or just a weird business transaction?

Miulang

[TuNnL]

Re: Affordable housing on Kahala Ave?

That's the problem. He has a reputation of not completing his projects or end of his deals. ... down the road it will be worse for them when and if Mr. Kawamoto suddenly becomes tired and says you gotta move out. He is not a man to be trusted.

Obviously, this issue is going to continue to overshadow this thread, so before we continue down this road, let’s balance it out with how Kawamoto is answering the naysayers:

“I'd like to transform Kahala Avenue into a more fun place,” said Genshiro Kawamoto. “There are many more homeowners whose houses are in worse condition. Mine are actually better ones.”

Still the feisty and eccentric developer not afraid to fire back at his critics!

[damontucker]

Re: Affordable housing on Kahala Ave?

He will hand pick his tenants. It is his honor to do so. I am happy for the families that will be chosen yet wonder if down the road it will be worse for them when and if Mr. Kawamoto suddenly becomes tired and says you gotta move out.

He is only offering 3 year leases... So potential tenants should know that in 3 years they could be evicted. Thats what a lease is... the owners right to re-evaluate the situation.

My question... is who will pick up the cost of the maintenance of the yards, the Utilities, etc. I imagine an electric/gas bill etc. would be rather large in a mansion.

I know if I were to get one of these properties... I would hold on to my current rental at the same time... just as a fall back plan.

[GeckoGeek]

Re: Affordable housing on Kahala Ave?

The way I read the IRS rules on gifts, it says each person can receive up to $12k tax-free every year.

Well, in digging around, it's less clear as to how this would be done. It appears that in general, gifts are not taxable to the receiver (They can be taxable to the giver. But that's K's problem. I ain't worried about him.) What you've cited is advice to the giver.

However, I've also seen where if the gift is the income from something, then it is taxable. Forgiven debts are taxable. Lottery winnings and other prizes are taxable. I'm not sure what this would be classified as. I think it's going to take a tax lawyer to figure out. But I think someone should figure this out, or else these families might find themselves big tax problems. These families probably will have a hard time paying the tax if it is ruled as taxable.

[poinographer]

Re: Affordable housing on Kahala Ave?

In my opinion, any (as yet theoretical) tax implications pale in comparison to the clear violations of the Fair Housing Act inherent in his selection process based upon race and familial status. I can't believe Kawamoto has the stones to continue to blow that issue off...

[Miulang]

Re: Affordable housing on Kahala Ave?

Well, in digging around, it's less clear as to how this would be done. It appears that in general, gifts are not taxable to the receiver (They can be taxable to the giver. But that's K's problem. I ain't worried about him.) What you've cited is advice to the giver.

However, I've also seen where if the gift is the income from something, then it is taxable. Forgiven debts are taxable. Lottery winnings and other prizes are taxable. I'm not sure what this would be classified as. I think it's going to take a tax lawyer to figure out. But I think someone should figure this out, or else these families might find themselves big tax problems. These families probably will have a hard time paying the tax if it is ruled as taxable.

Example of a tax free (to the recipient) "gift": Your parents, in wanting to reduce their tax liability and to qualify for Medicaid (so they don't have to pay $8k/mo to live in a nursing home that accepts Medicaid patients if they have not "spent down" their assets to an acceptable amount), can give you as of 2006, $12,000 per parent per year and you, as the recipient, bear no tax consequences whatsoever. They still pay taxes on that amount (but at a probably at a reduced rate) but you don't pay anything. This is actually something everyone who has elderly parents who still have a substantial estate might want to tell their parents about, if their parents don't already know this.

Miulang

P.S, I do hope that the first family that moves in also has a legal professional who can review that lease that they should insist on signing so they know their rights and are protected against sudden eviction.

[Miulang]

Re: Affordable housing on Kahala Ave?

Duplicate post. Nothing to see here. Carrion.

Miulang

[808shooter]

Re: Affordable housing on Kahala Ave?

However, I've also seen where if the gift is the income from something, then it is taxable. Forgiven debts are taxable. Lottery winnings and other prizes are taxable. I'm not sure what this would be classified as. I think it's going to take a tax lawyer to figure out. But I think someone should figure this out, or else these families might find themselves big tax problems. These families probably will have a hard time paying the tax if it is ruled as taxable.

I don't think this will be complicated at all. The gift tax exemption is perfect.

Fair market is $5000/month * 12 months = $60,000 annually

Cost to Hawaiian Family is $150/month * 12 month = $1800 annually

Potential taxable benefit of $58,200.

So as long as Kawamoto rents to a family of five, he's scott free.
$12,000 annual gift tax exemption * 5 family members = $60,000 exemption

He can say the below market rental is his gift to these families. And anyway, if they tried to enforce taxing these folks, it'd be a publicity nightmare. They want to avoid that kind of bad press right now.