A new bill could provide some tax relief for Oʻahu homeowners who offer their rental properties as long-term housing.

Honolulu City Council Bill 48 would apply to properties where tenants have lived for at least one year.

Rental properties in the “Residential A” category are normally subject to a higher tax rate than “residential” properties in which the owners live themselves. However, the measure would provide for a lower tax rate if the owners have rented units on a long-term basis.

“If you don’t live in the house, you’re put in ‘residential tax rate A.’ This bill would mean that … (if) you occupy the house with a tenant instead, we’ll reduce your tax. And that’s a good idea,” said Joe Kent, deputy executive director of the Grassroot Institute of Hawaii.

The bill could encourage homeowners to offer rental housing to their residents, which in turn could increase the local housing supply.

Bill 48 would also give homeowners the option to enter into a 10-year commitment on their property. During the commitment period, the property would be used exclusively as a long-term rental property at the lower tax rate.

The Grassroot Institute of Hawaii opposed this part of the measure, saying it could serve as a punishment for homeowners who choose not to comply with the entire dedication period by requiring those owners to pay back the property taxes they saved.

The County of Maui already has a tax bracket for long-term rentals, and the County of Hawaii is considering a similar measure.

The bill was introduced last week along with a number of other property tax measures and is due to be discussed in the Council plenary today.