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FORM G-72 STATE OF HAWAII - DEPARTMENT OF TAXATION
(REV. 2020)
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
GE __ __ __ - __ __ __ - __ __ __ __ - __ __
Lessor’s Name Lessor’s Hawaii Tax I.D. Number
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

PROPERTIES LOCATED IN A COUNTY WITH A COUNTY SURCHARGE, CONTINUE TO LINE 6
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 21 (for Hawaii), or line 22 (for Kauai), and in Part
I of Schedule GE (Form G-45/G-49). ........................................................................................ 6

GENERAL INSTRUCTIONS (5) The lessee must compute the allocations with no al-
Section 237-16.5, Hawaii Revised Statutes (HRS) allows lowances for changes during the specified term of the
a general excise tax (GET) deduction (“sublease deduction”) sublease, provided that this requirement shall not ap-
to a taxpayer who leases real property from a lessor, and ply to a lease with terms that vary in the amount of
who subsequently subleases that same real property to a periodic rent due, including a percentage lease with
sublessee. If that same real property is located in a coun- fixed minimum rent, a percentage lease with no mini-
ty with a county surcharge, an additional GET county sur- mum rent, a combination percentage lease with fixed
charge deduction (“additional sublease deduction”) is also minimum rent or percentage leases with no minimum
allowed. The deduction amounts cannot exceed the total rent, whichever amount is higher, or a graduated or
amount received from the sublease of that same real prop- step-up lease; and
erty. Use this worksheet to compute the sublease deduction (6) The lessee must retain records of the lessor’s name,
and if applicable, the additional sublease deduction. Failure general excise Hawaii tax identification number (Ha-
to meet the following requirements will result in the disallow- waii Tax I.D. No.), and the amounts paid to the lessor.
ance of the deduction(s): For purposes of the sublease deduction:
(1) The lessor and lessee must be licensed and taxable Lease means the rental of real property under an in-
on the gross proceeds or gross income received un- strument in writing by which one conveys real property for
der a written lease of real property under the GET a specified term and for a specified consideration, and in-
law; cludes the written extension or renegotiation of a lease, and
(2) The lessee must obtain Form G-71, General Excise any holdover tenancy.
Sublease Deduction Certificate, from the lessor; Lessee means one who holds real property under a
(3) The lessee must report the sublease deduction lease, and includes a sublessee. A lessee or sublessee in-
amount and the additional sublease deduction amount cludes a sublessor who is subject to the GET and qualifies
(if any) on Form G-45, Form G-49, and Schedule GE for the deduction under section 237-16.5, HRS, provided the
(Form G-45/G-49); real property or space is conveyed by a written sublease.
(4) The lessee’s sublease deduction is limited to leases Lessor means one who conveys real property by a lease,
and subleases in writing and related to the same real and includes a sublessor. A lessor does not include a per-
property or space; son who is not subject to the taxes imposed by chapter 237,

(Continued on back)

FORM G-72

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FORM G-72
(REV. 2020) PAGE 2
HRS, or a person whose gross proceeds or gross income subleased would not be a reasonable allocation method un-
from leasing the real property or space is not taxable under der these circumstances. An allocation based upon the fair
chapter 237, HRS. rental value of X would be reasonable. In this case, lessee
Sublessee means one who holds real property under a B would enter $200 (the portion of the $1,000 rent paid to
sublease. lessor A allocable to the upper floor office space) on line 1.
Sublessor means one who conveys real property by a Computation of the Sublease Deduction
written sublease, is subject to the GET on the gross rental Line 1 – Enter the amount of rent you paid to the lessor
receipts derived from the subletting of such real property, for the real property or space leased. If you sublease less
and qualifies for the deduction under section 237-16.5, HRS. than 100% of the real property or space that you leased
For more information, see section 18-237-16.5, Hawaii from the lessor, see the “Real Property Allocation” section
Administrative Rules. above.
SPECIFIC INSTRUCTIONS Line 2 – The rate is 0.875.
Use this worksheet to compute the sublease deduction. Line 3 – Multiply line 1 by line 2.
Use a separate worksheet for each real property or space Line 4 – Enter the amount of rent you received from the
for which you are claiming a deduction. Keep Form G-72 for sublease of the same real property or space. Include this
your records. amount in Part II, Column a on Form G-45 and on Form
G-49, for Transient Accommodations Rentals or Other Rent-
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 als, as applicable.
properly claimed. Line 5 – Enter the lesser of line 3 or line 4. This is the
amount of your sublease deduction to include in column b
REAL PROPERTY ALLOCATION of Forms G-45 or G-49 for Transient Accommodations Rent-
If you sublease less than 100% of the real property or als or Other Rentals, as applicable. Report on Schedule GE
space that you leased from the lessor, you must allocate (Form G-45/G-49) the amount of the sublease deduction, the
the total amount of rent you paid for that real property or amount paid to the lessor, and the name and general excise
space based upon the percentage of the real property or Hawaii Tax I.D. Number of the lessor.
space subleased, or the fair rental value of the real property Line 6 – If the property is located in a county with a county
or space subleased. The allocation may be based upon the surcharge, subtract the amount on line 5 from the amount
percentage of the real property or space subleased when it is on line 1. Include this amount in column b on Forms G-45
reasonable under the circumstances. If an allocation based or G-49, line 19 (for Oahu), line 21 (for Hawaii), or line 22
upon the percentage of the real property or space subleased (for Kauai), and in Part I of Schedule GE (Form G-45/G-49).
is not reasonable under the circumstances, you must allo- Once the county surcharge exemption is entered in Part I of
cate the total amount of rent you paid for the real property or Schedule GE (Form G-45/G-49), this will remove all of the
space subleased based upon the fair rental value. rent paid to the lessor by the sublessor for the property that
Example A: Lessor A leases real property X to lessee is subleased from the gross receipts subject to the county
B for $1,000 a year, and lessee B subleases the same real surcharge.
property X to sublessee C for $2,500 a year. Since lessee B WHERE TO GET INFORMATION
subleases 100% of real property X to sublessee C, lessee B
would enter $1,000 on line 1. More information is available on the Department’s web-
Example B: Lessor A leases real property X to lessee tax.hawaii.gov or you may contact a customer ser-
site at
vice representative at:
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 Voice: 808-587-4242
subleased by B and the portion not being subleased which 1-800-222-3229 (Toll-Free)
would significantly affect the value of the respective portions
of X, an allocation based upon the percentage of area of X
Telephone for the Hearing Impaired:
being subleased would be reasonable. In this case, lessee
B would enter $500 ($1,000 rent paid to lessor A x 50%) on 808-587-1418
line 1. 1-800-887-8974 (Toll-Free)
Example C: Lessor A leases real property X to lessee B
for $1,000 a year. Real property X consists of ground floor Fax: 808-587-1488
retail space (which has a rental value of $800) and upper
floor office space (which has a rental value of $200) equal in Mail: Taxpayer Services Branch
size to the ground floor retail space. Lessee B subleases only
P.O. Box 259
the upper floor office space to sublessee C for $2,500 a year.
An allocation based upon the percentage of area of X being Honolulu, HI 96809-0259

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