Ultimate Guide to Honolulu Property Taxes

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Confused about property taxes in Honolulu County Hawaii? Here, we provide a guide to how property tax works, how much it costs, and when you have to pay it. We offer an overview of property tax in Hawaii and specific information for those in the City and County of Honolulu.

Introduction: Property Taxes in Hawaii

Of all the states, Hawaii's tax rate of 0.27% is the lowest in the whole nation. The value of homes in Hawaii is higher than anywhere else in the U.S., averaging at $563,900. However, tax payments are still lower than in many other states.

One of the main reasons that property taxes are low in Hawaii is that the state provides large exemptions for many properties occupied by their owners. Some homeowners are eligible for homeowners' exemptions of up to $160,000.

Residential properties in Hawaii are taxed. But, in the Hawaiian islands, cars, boats and vehicles are not subject to property tax.

All these different rules and tax exemptions can make Honolulu property tax a complex matter to figure out. Check out our guide below for a clear breakdown of Oahu property tax.

How Does Property Tax Work in Hawaii?

All properties in Hawaii are subject to a tax rate. Each county in Hawaii is responsible for its own property tax administration and collection. That being said, all of them use relatively similar systems.

The property tax that you pay in each county depends on a home’s assessed value. This is determined by county officials in an appraisal. Once your tax band has been determined, any applicable exemptions are applied. From there, you receive your bill. This is due twice a year.

Variation in Property Tax Between Islands

The following tax rates show considerable variation between the counties of Hawaii. These are the rates per building or land plot. They do not account for any exemptions that can be applied.

• Honolulu: $3.50 per $1000, or $6.00 per $1000 on properties valued over $1,000,000
• Hawaii: $6.15 per $1000
• Kauai – $6.05 per $1000
• Maui – $5.57 per $1000

Tax rates in Honolulu are considerably lower than other parts of Hawaii. Better yet, exemptions mean that the actual paid tax rate for many properties is even less. We'll explain more about exemptions later in the article.

How Are Tax Bands Determined in Honolulu County?

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In Honolulu County, tax bands are based on the assessed value of a property. Assessed value simply means the monetary worth of the property according to the tax office. An appraisal team from the tax office comes up with this figure. You should know that this value will be different from the market value of the property (e.g. the price a buyer would pay).

With new homes, or recently remodeled homes, the property is usually visited individually to form an assessed value. Otherwise, properties tend to be valued by a mass appraisal.

A mass appraisal comprises data on home types, neighborhood, and a range of other factors. The accrued data is used to generate a value for a number of homes simultaneously. The tax office performs mass appraisals once a year. Afterward, the owners of the properties that have been valued receive an annual notice of assessment in the mail. This notice reports the assessed value of their property.

Once the assessed value has been calculated, any exemptions for which you are eligible are subtracted from the value. Following this, tax rates are applied.

Only homeowners who live in their property are eligible for home exemption. You can't qualify for an exemption if your property is a vacation home or rental.

Honolulu Property Tax Categories

The amount you pay for your City and County of Honolulu property tax depends on the tax band into which your property falls. There are three tax bands in Honolulu for residential properties. Here, we'll take a look at the details of each tax bands and any applicable exemptions.

Residential:

The residential rate is 0.35% of assessed value. This rate is used in cases where the homeowner claims homeowners exemption, regardless of the assessed value of the property. It can also apply to properties with an assessed value lower than $1,000,000 in cases where the owner cannot apply or is not eligible claim the home exemption.

Home exemption can only be claimed when the property is the primary residence of the owner. To be eligible, proof of this is necessary. Proof includes:

• Tax returns filed as a resident
• Being registered to vote in Honolulu
• Occupying the property for at least 270 days of the year

Successful claims for home exemption give the property owner a $100,000 exemption if they are under 75 years of age. This means that the assessed value is reduced by $100,000 and taxes are paid on the remaining balance.

For property owners over 75, there are increasing rates of exemption. For those between 75 and 79 years, it is $140,000. For those aged 80 t 84, it is $160,000. For those aged 85 to 89, it is $180,000. Residents aged 90 years or older can qualify for exemptions of $200,000.

Residential A:

Residential A is a two-tiered tax rate. There is a rate of 0.45% for a property with assessed value up to $1,000,000 and 1.05% of the assessed value for properties above $1,000,000.

This tax band applies to cases where the owner of a property does not or cannot claim for home exemption. Eligibility applies where the assessed value of the property is $1,000,000 or more.

Hotel & Resort:

The hotel and resort tax band is for property owners in Honolulu who rent their property/properties out as vacation rentals. In this case, the tax rate is set at 1.39% of the assessed value of the property.

What if You Think Your Oahu Property Tax Band Is Wrong?

Your tax band is determined by your property's assessed value. If you think you're in the wrong tax band, it could be because the assessed value is wrong.

The best thing to do is to check your annual notice of assessment to determine your assessed value. If you find that you disagree with this value - e.g. it is too high - you have the right to appeal the decision. You can do so through the local tax board. It is useful to have actual recent sold data to support your claim.

How Often Do You Pay Property Tax in Honolulu?

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Honolulu County covers the Island of Oahu. The County expects taxes to be paid in two installments per fiscal year. For property taxes, the fiscal year runs from July 1 through to June 30 of the following year. Installments deadlines are as follows:

• The first installment is due on August 20. Owners receive their bill in July. This payment covers taxes from July 1 to December 31.
• The second installment is due on February 20. Owners receive their bill in January. This payment covers taxes from January 1 to June 30.

Is There a Fine for Late or Missed Payments in Honolulu?

Yes. Late payment of property taxes results in interest added to the amount due. The interest rate is 1% for each month you are late. This rate applies to all penalties and taxes.

What Do I Do if I Am a New Property Owner in Honolulu?

If you recently bought a property in Honolulu, you will need to send a request to the tax office. Ask them to post your tax bill to a different address, rather than the previous owner's address.

This may take up to four months while the tax office updates its records. To prevent your tax bill from being sent to the previous owner's address, you can contact the Honolulu Property Tax Department directly. Request that they mail your next property tax bill to your address.

What Do You Do in the Case of Shared Ownership Properties? 

In most cases, the same rules outlined here apply for shared ownership of properties. However, there are a couple of differences to point out.

If you already own or are thinking about owning, a property in Honolulu Hawaii with a group of people (such as a timeshare), your property tax bill will not be eligible for an exemption.

You should, however, make sure that all collaborative owners receive both the property assessment notice, as well as the tax bill via mail. At current, none of the Hawaiian counties are able to break down bills to provide pro-rata calculations for individual owners. Shares need to be worked between the group members.

Paying Your Oahu Property Tax and Further Information

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In Honolulu county, there are four ways to pay your property taxes:

1. You can use the website www.hnlpay.com. Note that you maybe charged for certain card types.
2. Checks are accepted. These should be issued to 'City & County of Honolulu' and sent via mail.
3. To pay in person, with either cash or check, you can visit City Hall. Their address is 530 S. King Street, Honolulu, HI 96813.
4. Finally, you could also pay by telephone at 1 (877) 309-9117.

You can download and print all forms and documentation for property tax from the Honolulu City and County website. The government website also provides essential information and up-to-date contact details for making payments. This can be found on the official Honolulu site.

If you need more information about property taxes in Honolulu, do get in touch with us. We are always more than happy to offer advice and point you in the right direction. You can also get more information about Koula at Ward Village by getting in touch.