How Much Are Property Taxes In Hawaii?

If you’re considering buying property in Hawaii or already own real estate there, you’re probably wondering how much you’ll owe each year in property taxes. This is an important question since property taxes can really add up, especially on pricier homes.

If you’re short on time, here’s a quick answer to your question: The effective property tax rate in Hawaii is about 0.28%, which equates to an average bill of $1,700 per year. However, property taxes in Hawaii can vary widely depending on the value and classification of your property.

In this comprehensive guide, we’ll walk through everything you need to know about Hawaii property taxes including tax rates, assessments, exemptions, how the money is used, and tips for estimating your future property tax bill.

Hawaii Property Tax Rates

Average Statewide Rate

The average property tax rate across Hawaii is about 0.28%, which comes out to around $1,400 per year for a home valued at $500,000. This makes Hawaii’s property taxes among the lowest in the United States. However, there is significant variation between counties.

County Tax Rates

Property tax rates in Hawaii are set at the county level. Here’s an overview of the different county rates:

• Honolulu County: 0.40% (highest)
• Maui County: 0.27%
• Kauai County: 0.27%
• Hawaii County: 0.23% (lowest)

As you can see, Honolulu County has the highest property tax rate at 0.40%, while Hawaii County is the lowest at 0.23%. So a $500,000 home would face a $2,000 annual tax bill in Honolulu County, compared to just $1,150 in Hawaii County.

Special District Rates

In addition to county property taxes, some parts of Hawaii also have special tax districts that levy additional rates to fund local infrastructure projects. For example:

• Ko Olina Resort in Oahu adds another 0.44% tax rate on top of Honolulu County’s 0.40%.
• Waikoloa Resort in Hawaii County tacks on a 0.47% rate to the 0.23% county tax.

So buyers looking in resort areas may pay upwards of 0.9% when accounting for special district taxes. Be sure to investigate the full tax rate when house hunting!

How Property Value is Assessed

Market Value

In Hawaii, the market value of a property is used to determine its assessed value for property tax purposes. The market value is the estimated price that a property would sell for on the open real estate market.

To assess the market value, the county tax assessor looks at recent sales of comparable properties in the same area. They analyze the sale prices, property sizes, locations, ages of buildings, and other characteristics to estimate what the subject property could realistically sell for.

Hawaii aims to tax properties at 100% of their market value. However, with frequent fluctuations in the island’s hot housing market, assessed values often lag behind the true current market prices. The tax assessor may also apply depreciation and make other adjustments.

Nonetheless, Hawaii’s property taxes remain quite high relative to most other states.

Tax Class

Hawaii categorizes properties into different classes for property tax purposes. The four major classes are:

• Owner-occupied residential – Lowest tax rates for primary homes.
• Non-owner-occupied residential – Higher tax rates for second homes or rental properties.
• Commercial
• Industrial – Highest property tax rates.

There are also special classes for hotels, apartments, agriculture, conservation lands and more. Each county further divides properties based on precise use. The assigned property class determines what tax rate applies.

As shown above, tax rates can vary dramatically depending on the class. Determining the accurate class is crucial. Property owners may appeal their assessment if they believe the assigned class is incorrect.

Common appeals involve rental properties wrongly classified as commercial rather than residential.

Property Tax Exemptions

Homeowner Exemption

There are significant property tax exemptions available to Hawaii homeowners. The home exemption can reduce a homeowner’s taxable value by $80,000 or more, resulting in thousands in savings (source). To qualify, the home must be owner-occupied as a primary residence.

Rentals and second homes do not qualify. Applying for the exemption is straightforward—simply submit an application form along with proof of ownership and residency.

In addition, Hawaii offers an exemption for homeowners ages 60 and older with longer-term residency. This can exempt an additional $120,000 from the taxable value. Nice savings for Hawaii’s retiree community!

Disability & Age Exemptions

Hawaii also provides generous property tax exemptions for those with disabilities and seniors. An exemption of up to $28,000 is available for homeowners with a certified disability. Nice to see Hawaii extending a helpful hand. 👍

For seniors ages 60+, an exemption up to $120,000 applies progressively—the longer you’ve lived in Hawaii, the higher the exemption. Live here 30+ years and get the full $120k off your tax bill. Now that’s aloha! 🌺 This exemption even transfers to a surviving spouse after death.

Smart financial planning for Hawaii’s retirees and aging population.

With its combination of disability, senior, and homeowner exemptions, Hawaii property taxes certainly tilt favorably for resident owners. These progressive exemptions help make Paradise more affordable. 🏝 Applying is easy too—file the form, verify eligibility and see those property taxes plummet! 📉

Where The Money Goes

County General Funds

The largest portion of property tax revenue goes into county general funds, which support vital public services. For example, on Oahu, about 41% of property taxes collected funds police, fire protection, public infrastructure, and community programs across the island.

Hawaii’s counties depend on property taxes as a major source of revenue. According to budget data, property taxes comprised 29% of Kauai County’s general fund in 2021. Other revenue sources like transient accommodation taxes plummeted during the pandemic, increasing counties’ reliance on steady property tax income.

County Capital Improvements

In addition to supporting annual operating budgets, property taxes fund long-term capital projects. This includes new government facilities, transportation infrastructure, parks, etc. On Maui, around $19 million in property taxes went directly to capital improvements in 2022.

Property taxes help Hawaii’s counties make progress on much-needed upgrades and development goals. With many critical projects backlogged, consistent property tax revenue is crucial for improvements across all islands.

School District Funds

A portion of collected property taxes goes towards funding Hawaii’s statewide school district. The DOE relies on this funding stream for school operations, staff salaries, and facility expenses.

In the 2023 fiscal year, Hawaii’s Department of Education is receiving over $230 million in property tax revenue. This accounts for 9.6% of their $2.4 billion operations budget. Additional funding comes from state general funds and federal grants.

Rising property assessments have increased education funding without raising tax rates. However, schools continue facing budget pressures from inflation, recruitiment challenges, deferred maintenance costs, and pandemic impacts.

Estimating Your Future Property Taxes

Review County Tax Rates

When estimating your future property taxes in Hawaii, the first step is to review the tax rates in your county. Hawaii has different property tax rates depending on which county you live in. For instance, Honolulu County’s average rate is around $12.40 per $1,000 of assessed value, while Hawaii County’s is approximately $9.55.

Checking your specific county’s current tax rate will give you an idea of what percentage you’ll be paying annually in taxes on your home’s value.

Estimate Property Value

Next, you’ll want to estimate what the value of your Hawaii property might be. This will likely be based on recent sales of comparable homes in your neighborhood. While it’s impossible to know exactly what your home will appraise for, looking at similar property sales from the last 6-12 months can provide a reasonable ballpark figure.

From there, you can multiply this estimated value by your county’s tax rate to calculate potential property taxes.

Factor In Exemptions

Hawaii offers exemptions that can reduce your taxable value, including homeowner exemptions and exemptions for kupuna (seniors) and disabled residents. Make sure to research eligibility requirements for reductions and factor any savings into your property tax estimate.

For 2023, Oahu’s home exemption drops taxes on the first $80,000 of a home’s value by $140. Discounts for seniors and disabled individuals can be as high as $300,000 in exempted value statewide.

Use Hawaii Property Tax Calculator

For the most accurate look at your future property tax payment, use Hawaii’s online tax calculator. You can input details like your purchase price, exemptions, and county to get an estimate tailored to your situation.

For instance, the calculator at HawaiiPropertyTax.com quickly runs the numbers based on your inputs. Getting a customized estimate can help you budget for this major ongoing homeownership cost. And you can always contact your county finance office with any other questions!

Conclusion

When buying a home, property taxes are an important piece of your ownership costs to consider. We hope this outline has helped explain key details on how much you can expect to pay in Hawaii property tax based on your home’s value, classification, exemptions, and more.

Be sure to use all this information to produce an estimate before purchasing so there are no surprises. Reach out to a local real estate agent as well for more personalized guidance on Hawaii property taxes for the home you have your eye on.

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