Did you know that there are some exemptions that you can employ to save on your property taxes in Hawai‘i? One of the most commonly used exemptions is the real property tax exemption for homeowners. If you own a home in Hawai‘i, your property tax exemption is based on a variety of considerations regarding your intent to reside in the home. Some of these include:
1) You occupy your home for a minimum number of calendar days in a year — on O‘ahu, the minimum number of days is 270; County of Kaua‘i, 18 days; Maui County, 270 days; and on Hawai‘i island, the minimum number of days is 200.
2) You file your income tax return as a Hawai‘i resident with this home address;
3) You are stationed in the city under military orders of the United States; and/or
4) You are registered to vote in the city in which your home is located.
The homeowner exemption reduces the total assessed value of your home. The assessed value is used to calculate your property taxes. Originally, the exemption was only $300. Over the years, however, it was adjusted and now varies among the counties in Hawai‘i.
On O‘ahu, the homeowner exemption is $80,000. It increases to $120,000 for residents over the age of 65.
The homeowner exemption for Kaua‘i County residents under age 60 is $160,000. The exemption increases to $180,000 for residents between the ages of 60 and 70. For Kaua‘i County residents over the age of 70, the exemption is $200,000.
The Maui County exemption is $200,000 for all homeowners, regardless of age. The county no longer offers an increased exemption for its older residents.
On the island of Hawai‘i, the homeowner’s exemption is $40,000 for residents under age 60 and $80,000 for those between the ages of 60 and 70. The exemption jumps to $100,000 for Hawai‘i island residents over the age of 70.
The homeowner property tax exemption for married couples that live separately can be split between their two residences. However, it cannot be taken in full for each home. Additionally, forms requesting the exemption must be filed by the deadline in order to qualify for that year’s exemption.
Under certain conditions, the homeowner exemption may also be available to residents who do not own the real property in which they reside. One common situation is for residents who live in a home owned by a trust. Hawai‘i residents with assets placed in trusts may allow the beneficiaries of their trusts, including themselves, to claim the homeowner’s exemption as long as the beneficiary meets the other requirements listed above.
Residents who lease property in Hawai‘i may be eligible to claim a homeowner’s exemption for the property they live in if the lease meets the requirements of the county in which the home is located. The lease must be recorded and it must meet the minimum term length required by that county:
• Honolulu: five-year lease;
• Kaua‘i County: 15-year lease;
• Maui County: 15-year lease (a five-year lease in Maui County allows the resident to claim an exemption for only the value of the land); and
• Hawai‘i island: 10-year lease.
In addition to the homeowner’s exemption, there are other property tax exemptions. They are for individuals with low-income; totally disabled veterans; Hansen’s disease patients; and blind, deaf or totally disabled persons.
A good estate plan should consider whether the homeowner qualifies for any of these exemptions. We help our clients understand which exemptions, such as the homeowner’s real property tax exemption, are appropriate for their estate, asset protection and Medicaid planning.
© OKURA & ASSOCIATES, 2017
Honolulu Office (808) 593-8885
Hilo Office (808) 935-3344
Ethan R. Okura received his Doctor of Jurisprudence Degree from Columbia University.
Carroll (Cary) D. Dortch received his Doctor of Jurisprudence Degree from the University of New Hampshire School of Law, and clerked for the Honorable Judge David G. Campbell in Arizona.
The lawyers at Okura & Associates focus their practice on Estate Planning to protect assets from nursing home costs, probate, estate taxes, and creditors.
This column is for general information only. The facts of your case may change the advice given. Do not rely on the information in this column without consulting an estate planning specialist.