I 

109TH CONGRESS 

1ST SESSION H. R. 2476 

To amend the Internal Revenue Code of 1986 to exclude from gross income 

gain on the sale of certain residential leased-fee interests to holders 

of the leasehold rights. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 19, 2005 

Mr. ABERCROMBIE introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to exclude 

from gross income gain on the sale of certain residential 

leased-fee interests to holders of the leasehold rights. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. EXCLUSION OF GAIN FROM SALES OF CERTAIN 

4 RESIDENTIAL LEASED-FEE INTERESTS TO 

5 HOLDERS OF THE LEASEHOLD RIGHTS. 

6 (a) GENERAL RULE.—Part III of subchapter B of 

7 chapter 1 of the Internal Revenue Code of 1986 (relating 

8 to items specifically excluded from gross income) is 
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1 amended by inserting after section 139A the following new 

2 section: 

3 ‘‘SEC. 139B. SALES OF CERTAIN RESIDENTIAL LEASED-FEE 

4 INTERESTS TO HOLDERS OF THE LEASEHOLD 

5 RIGHTS. 

6 ‘‘(a) GENERAL RULE.—In the case of a fee simple 

7 owner-lessor, and legal and equitable owners, of qualified 

8 property, gross income does not include gain from the sale 

9 of such property to a holder of the leasehold right if such 

10 holder is— 

11 ‘‘(1) a lessee of a residential house lot, 

12 ‘‘(2) a lessee of a multi-family residential lease13 hold unit, 

14 ‘‘(3) an association of apartment owners of a 

15 multi-family residential leasehold property, or 

16 ‘‘(4) a cooperative housing corporation for a 

17 residential leasehold property. 

18 ‘‘(b) QUALIFIED PROPERTY.—For purposes of sub19 section (a), the term ‘qualified property’ means the leased20 fee interest to any residential house lot or the leased-fee 

21 interest in a condominium or co-operative housing apart22 ment in a multi-family residential leasehold property. 

23 ‘‘(c) OTHER DEFINITIONS.—For purposes of sub24 section (b)— 
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1 ‘‘(1) FEE SIMPLE OWNER, LEASED-FEE INTER2 EST, LEGAL AND EQUITABLE OWNERS, LESSEE.— 

3 The terms ‘fee simple owner’, ‘leased-fee interest’, 

4 ‘legal and equitable owners’, and ‘lessee’ shall have 

5 the same meaning as defined in Hawaii Revised 

6 Statutes §516–1. 

7 ‘‘(2) MULTI-FAMILY RESIDENTIAL LEASEHOLD

8 PROPERTY, MULTI-FAMILY RESIDENTIAL LEASE9 HOLD UNIT.—The terms ‘multi-family residential 

10 leasehold property’ and ‘multi-family residential 

11 leasehold unit’ mean property or units within a 

12 planned unit development, condominium project, or 

13 cooperative housing project, as those terms are de14 fined in Hawaii Revised Statutes §514C–1. 

15 ‘‘(d) TERMINATION.—This section shall not apply to 

16 any taxable year beginning after December 31, 2010.’’. 

17 (b) CLERICAL AMENDMENT.—The table of sections 

18 for such part is amended by inserting after the item relat19 ing to section 139A the following new item: 

‘‘Sec. 139B. Sales of certain residential leased-fee interests to holders of the 

leasehold rights.’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to sales after December 31, 2005. 

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