Kailua Kona Real Estate Blog

Hawaii County Property Taxes

Aloha, friends how to get the lowest possible property taxes for your Big Island property

So, we are going to look at the property classes and tax rates for each category here on the Big Island and discuss some of the ways to get the lowest possible tax rate and how to go about doing that for your residence

The first thing we are going to discuss the property tax classes and what their rates of taxes are.

Remember these rates are on the tax assessed values set by the county and not the actual price you paid for your property, what redfin and Zillow says its worth,  or an appraised value.   Since the County assessed values are typically lagging behind, the assessed valued will Normally be lower than market value, however if appeal your assessed value because you feel the value of your property should = be higher, then you could be paying higher taxes and we don’t think you want to do that

I think you would agree this is a confusing way of determining tax rates, its $1000 dollars per net taxable value of $1000 dollars that is probably not the best way to show it and the easiest way to explain and to put it into plain language you just move the decimal point one point to the left and you turn it into a percentage

 so for example using the affordable rental housing rate of $5.95 per $1000 dollars it would calculate easier at .595% of the taxed assessed value and that would be your assessed taxed value

So, we are going to go through all of these and discuss some of these classes and skip over the ones that probably you will never experience.

The first one is the residential class and rate and that all residences are charged if the property is residentially zoned and you don’t have any type of homeowner’s exemption and its not your primary residence

 As you can see you will be charged 1.110% per $1000 dollars up to $2million dollars of assessed value and for any property above $2 million dollars you are going to pay 1.315%.    So, if you have a 4 million dollars home, cudos to you. So, you will be paying 1,110% on the 1^st 2 million dollars of assessed value and 1.315% on anything above 2million dollars in assessed value so you will be paying 2 separate tax rates on your property as a result

The apartment rates is 1.17%, the commercial rate is 1.07% as well as the industrial rate.   The ag and native forest rate of 9.35% is typically lower in other areas of the country, but here they are higher than the residential rate that we will be focusing on in a minute

There are tax exemptions for agriculturally zoned properties that the county just updated last year and they are a bit challenging. I would recommend to talk with your tax accountant if you own ag land, reside there full time and a portion of your property has an agricultural or farm component to its operation and use.

The next 2 we aren’t going to discuss because you will more than likely be impacted by these rates.   So, the homeowner’s rate is .595% and that is the one we are going to spend the majority of our time talking about.  It is significantly lower than the agricultural rate and almost half of the residential rate which is a big difference.   That is why our property taxes for primary residence is one of the lowest in the country and you have to qualify to get that rate.

It's not automatic to obtain a tax exemption when you buy your home, you must submit an affidavit to the county with your paperwork and we are going to talk about the homeowner’s rate and some of the exemptions you can qualify for that will reduce your property taxes significantly

Once the homeowner’s exemption rate is obtained, the assessed value of a property will reduce the net taxable value of your home.  The homeowner’s exemption is applied to a home that you have the homeowner rate on and the 1^st part of it is you get 20% of homes valued exempted up to $100 thousand dollars so say you own a $400,000 dollar home $100K of the value will be exempted so you

 will only be taxes at $300,000 dollars at the .595% rate, however if you are senior you will qualify for even more exemptions if you qualify

If you are 60 you get an additional 50K exempted, if you are 60 to 64 and additional 85K exempted, 65 to 69 90K exempted.  70 to 74 105K exempted and from 75 and older you get 110K exempted.

This is inclusive of the original 100K max you can get therefore your property tax exemption on the homeowner rate if you qualify can go as high 205K of tax exemption for your homes property value.

This is a really big deal if you are a senior living in the county of Hawaii as your primary residence.

The county will not automatically give you these additional tax exemptions, you must, I repeat must apply for them directly with the county tax office and submitted prior to July 1^st to qualify otherwise it will not go into effect until the following year.   Don’t forget our property taxes are 6 months in arears so we are always behind in paying property taxes

So how do you know you are eligible for a property tax exemption. Well, there are 4 requirements you must meet to qualify for the homeowner’s exemption

The 1^st one is, You own and occupy the property as your principal home for more than 200 calendar days of a calendar year 

#2  The ownership of your property is recorded at the Bureau of

Conveyances on or before December 31 preceding the tax year for

which the exemption is claimed or by June 30.

#3 You file a claim for home exemption, using RP Form 19-71, with the County of Hawaii Property Tax Office on or before Dec. 31 preceding the tax year for the

first half payment or June 30 for the second half payment.      

#4  You have filed a State of Hawai‘i Resident Income Tax Return (N11)

within the last 12 months or have requested a waiver from this

requirement for one of the following reasons:

You are a new resident to

the State of Hawai‘i and will file a State of Hawai‘i Resident Income Tax

Return within the next 12 months or You are not required to file

under State of Hawai‘i Income Tax Law and not required to file income

tax in any other jurisdiction other than at the U.S. Federal level

So if I own a property with a land lease can I qualify for the exemption?

Yes, the owner or lessee (recorded lease with a term of 10 years or more) has filed a claim for home exemption on or before the filing deadline of December 31 or June 30 of the preceding tax year

Now that you know how to qualify, let’s talk about the ways you do not qualify for the property tax exemption

A property IS NOT eligible for a home exemption if:

• The ENTIRE home is rented out (even on occasion) as a Transient Accommodation Rental or long-term rental.

• The home has an approved Short ­Term Vacation Rental (STVR) certificate with the Planning Department as this approval is for non-­hosted rentals only.

• The owner has a home exemption or principle home in another jurisdiction. •

The owner has NOT filed a Hawai’i state income tax return as a full time resident or filed a conditional waiver of this requirement.

There are a few other ways of getting these tax exemptions and they are

You must be

 blind, deaf or totally disabled

2) Have Hansen’s disease

3) Are a totally disabled veteran

I am not qualified to explain these situations so you may want to consult your CPA or contact the County of Hawaii tax office for more details.

if you are a totally disabled veteran due to injuries received while on active duty status with any of the armed forces, your primary residence will be exempt from any property taxes other than special assessments and the annual minimum property tax which is $300.00

So that wraps up the Hawaii County property tax rate information and tax exemptions.

We always advise are clients prior to closing to submit their paperwork if they qualify for the tax exemption.  Again this is voluntary and no one will do the paperwork for you to gain the exemption.

If you have any question as always feel free to reach out to us any time we are here to help you.

Thanks again for watching and all your support.   Aloha