Hawaii Sublease Deduction Worksheet

Sublease Deduction Worksheet
Form G-72, Rev. 2024, Sublease Deduction Worksheet
Clear Form

FORM G-72
(REV. 2024)

STATE OF HAWAII - DEPARTMENT OF TAXATION

SUBLEASE DEDUCTION WORKSHEET

Do NOT file this worksheet with the Department of Taxation. Keep it for your records.
Lessee’s Name

Lessee’s Hawaii Tax I.D. Number

Lessor’s Name

Lessor’s Hawaii Tax I.D. Number

GE __ __ __ - __ __ __ - __ __ __ __ - __ __
GE __ __ __ - __ __ __ - __ __ __ __ - __ __

Description of real property or space leased

COMPUTATION OF THE SUBLEASE DEDUCTION
1. Amount of rent you paid to the lessor for the real property or space leased. (If you sublease less
than 100% of the real property or space that you leased from the lessor, see Instructions.)............. 1
2. Allowable rate used in computing the deduction........................................................................ 2

0.875

3. Multiply line 1 by line 2. This is your maximum allowable deduction.......................................... 3
4. Amount of rent you received from the sublease of the same real property or space.................. 4
5. Sublease deduction. Enter the lesser of line 3 or line 4. Include this amount in
column b on Forms G-45 or G-49, for Transient Accommodations Rentals
or Other Rentals, as applicable.................................................................................................... 5
6. Subtract the amount on line 5 from the amount on line 1. Include this amount in column b on
Forms G-45 or G-49, line 19 (for Oahu), line 20 (for Maui), line 21 (for Hawaii), or line 22 (for
Kauai), and in Part I of Schedule GE (Form G-45/G-49). .......................................................... 6
GENERAL INSTRUCTIONS
Section 237-16.5, Hawaii Revised Statutes (HRS) allows
a general excise tax (GET) deduction (“sublease deduction”)
to a taxpayer who leases real property from a lessor, and
who subsequently subleases that same real property to a
sublessee. An additional GET county surcharge deduction
(“additional sublease deduction”) is also allowed. The deduction amounts cannot exceed the total amount received
from the sublease of that same real property. Use this worksheet to compute the sublease deduction and if applicable,
the additional sublease deduction. Failure to meet the following requirements will result in the disallowance of the
deduction(s):
(1)	 The lessor and lessee must be licensed and taxable
on the gross proceeds or gross income received under a written lease of real property under the GET
law;
(2)	 The lessee must obtain Form G-71, General Excise
Sublease Deduction Certificate, from the lessor;
(3)	The lessee must report the sublease deduction
amount and the additional sublease deduction amount
(if any) on Form G-45, Form G-49, and Schedule GE
(Form G-45/G-49);
(4)	 The lessee’s sublease deduction is limited to leases
and subleases in writing and related to the same real
property or space;
(5)	 The lessee must compute the allocations with no allowances for changes during the specified term of the
		
		

sublease, provided that this requirement shall not apply to a lease with terms that vary in the amount of
periodic rent due, including a percentage lease with
fixed minimum rent, a percentage lease with no minimum rent, a combination percentage lease with fixed
minimum rent or percentage leases with no minimum
rent, whichever amount is higher, or a graduated or
step-up lease; and
(6)	 The lessee must retain records of the lessor’s name,
general excise Hawaii tax identification number (Hawaii Tax I.D. No.), and the amounts paid to the lessor.
For purposes of the sublease deduction:
Lease means the rental of real property under an instrument in writing by which one conveys real property for
a specified term and for a specified consideration, and includes the written extension or renegotiation of a lease, and
any holdover tenancy.
Lessee means one who holds real property under a
lease, and includes a sublessee. A lessee or sublessee includes a sublessor who is subject to the GET and qualifies
for the deduction under section 237-16.5, HRS, provided the
real property or space is conveyed by a written sublease.
Lessor means one who conveys real property by a lease,
and includes a sublessor. A lessor does not include a person who is not subject to the taxes imposed by chapter 237,
HRS, or a person whose gross proceeds or gross income
from leasing the real property or space is not taxable under
chapter 237, HRS.
(Continued on back)
FORM G-72 (REV. 2024)

FORM G-72 (REV. 2024)	
Sublessee means one who holds real property under a
sublease.
Sublessor means one who conveys real property by a
written sublease, is subject to the GET on the gross rental
receipts derived from the subletting of such real property,
and qualifies for the deduction under section 237-16.5, HRS.
For more information, see section 18-237-16.5, Hawaii
Administrative Rules.
SPECIFIC INSTRUCTIONS
Use this worksheet to compute the sublease deduction.
Use a separate worksheet for each real property or space
for which you are claiming a deduction. Keep Form G-72 for
your records.
The deduction(s) must be reported on Form G-45, Form
G-49, and Schedule GE (Form G-45/G-49) in order to be
properly claimed.
REAL PROPERTY ALLOCATION
If you sublease less than 100% of the real property or
space that you leased from the lessor, you must allocate
the total amount of rent you paid for that real property or
space based upon the percentage of the real property or
space subleased, or the fair rental value of the real property
or space subleased. The allocation may be based upon the
percentage of the real property or space subleased when it is
reasonable under the circumstances. If an allocation based
upon the percentage of the real property or space subleased
is not reasonable under the circumstances, you must allocate the total amount of rent you paid for the real property or
space subleased based upon the fair rental value.
Example A: Lessor A leases real property X to lessee
B for $1,000 a year, and lessee B subleases the same real
property X to sublessee C for $2,500 a year. Since lessee B
subleases 100% of real property X to sublessee C, lessee B
would enter $1,000 on line 1.
Example B: Lessor A leases real property X to lessee
B for $1,000 a year, and lessee B subleases 50% of real
property X to sublessee C for $2,500 a year. Assuming
there are no significant differences between the portion of X
subleased by B and the portion not being subleased which
would significantly affect the value of the respective portions
of X, an allocation based upon the percentage of area of X
being subleased would be reasonable. In this case, lessee
B would enter $500 ($1,000 rent paid to lessor A x 50%) on
line 1.
Example C: Lessor A leases real property X to lessee B
for $1,000 a year. Real property X consists of ground floor
retail space (which has a rental value of $800) and upper
floor office space (which has a rental value of $200) equal
in size to the ground floor retail space. Lessee B subleases
only the upper floor office space to sublessee C for $2,500
a year. An allocation based upon the percentage of area of
X being subleased would not be a reasonable allocation

PAGE 2
method under these circumstances. An allocation based
upon the fair rental value of X would be reasonable. In this
case, lessee B would enter $200 (the portion of the $1,000
rent paid to lessor A allocable to the upper floor office space)
on line 1.
Computation of the Sublease Deduction
Line 1 – Enter the amount of rent you paid to the lessor
for the real property or space leased. If you sublease less
than 100% of the real property or space that you leased from
the lessor, see the “Real Property Allocation” section above.
Line 2 – The rate is 0.875.
Line 3 – Multiply line 1 by line 2.
Line 4 – Enter the amount of rent you received from the
sublease of the same real property or space. Include this
amount in Part II, Column a on Form G-45 and on Form
G-49, for Transient Accommodations Rentals or Other Rentals, as applicable.
Line 5 – Enter the lesser of line 3 or line 4. This is the
amount of your sublease deduction to include in column b
of Forms G-45 or G-49 for Transient Accommodations Rentals or Other Rentals, as applicable. Report on Schedule GE
(Form G-45/G-49) the amount of the sublease deduction, the
amount paid to the lessor, and the name and general excise
Hawaii Tax I.D. Number of the lessor.
Line 6 – Subtract the amount on line 5 from the amount
on line 1. Include this amount in column b on Forms G-45
or G-49, line 19 (for Oahu), line 20 (for Maui), line 21 (for
Hawaii), or line 22 (for Kauai), and in Part I of Schedule GE
(Form G-45/G-49). Once the county surcharge exemption is
entered in Part I of Schedule GE (Form G-45/G-49), this will
remove all of the rent paid to the lessor by the sublessor for
the property that is subleased from the gross receipts subject
to the county surcharge.
WHERE TO GET INFORMATION
More information is available on the Department’s website at tax.hawaii.gov or you may contact a customer service representative at:
Voice: 808-587-4242
	
1-800-222-3229 (Toll-Free)
Telephone for the Hearing Impaired:
	
808-587-1418
	
1-800-887-8974 (Toll-Free)
Fax: 808-587-1488
Mail: Taxpayer Services Branch
	
P.O. Box 259
	
Honolulu, HI 96809-0259