Ever since 1981, each of the four counties of Hawaii have had complete control over their own real property tax systems. Real property taxes are paid by property owners and contributed towards the financing of public services such as fire and police protection, street maintenance and lighting, water, sewer and refuse collection, and recreational facilities and activities. It has been estimated that approximately 45% of every revenue dollar collected for these services comes from real property taxes.
How Are Tax Amounts Determined?
Real property taxes in all of Hawaii are based on 100% of the fee simple market value, as determined by the Real Property Assessment Division of the Department of Finance, utilizing a “Mass Appraisal Method of Valuation” that uses an automated land and building indexing system (the process is imperfect, but because there so few county appraisers and so many parcels, it has been accepted as the best alternative for the time being). Once the Assessed Value has been determined, any applicable Exemption amounts are subtracted from it to determine the Net Taxable Value, according to the following formula:
(Assessed Value) – (Exemptions) = Net Taxable Value
What are Exemptions?
There are certain homeowner exemptions available to individuals who occupy a property as their principal residence. These types of exemptions include:
- Basic Home Exemption ($160,000) – Homeowners under 60 years of age receive this standard exemption. For homeowners aged 60-70, the exemption is increased to $180,000, and for homeowners older than 70 years old, the exemption is increased to $200,000.
- Additional Home Exemption Based on Income (Additional $120,000) – Possible additional exemption amount if the annual gross income of the owner-occupant(s) does not exceed the qualified Gross Income ceiling amount for established for that year; must be applied or annually.
- Totally Disabled Veteran Exemption (Complete Exemption) – If the homeowner is disabled due to injuries received while on active duty with the U.S. Armed Forces, the property is exempt from all real property taxes except for the minimum tax of $100.
- Disability Exemption (Additional $50,000) – Special exemptions for homeowners who are totally disabled, blind, deaf, or who are Hansen’s Disease sufferers
Tax Rates & The Calculation of Taxes Owed
Once the Net Taxable Value is calculated by subtracting any applicable exemption amounts from the Assessed Value of the property, a Tax Rate is applied to that figure to determine the actual amount of taxes owed, as shown here:
(Net Taxable Value) * (Tax Rate) = Taxes Owed
Tax Rates are pre-established rates set by the County Council, which are set separately for each class of property, and for land and buildings. The classifications are: Residential, Vacation Rental, Commercial, Industrial, Agricultural, Conservation, Hotel/Resort, and Homestead. Other than Homestead, these classifications are based upon the property zoning. The Homestead classification, however, is for properties which are used only as the homeowners principal residence, no matter what the zoning is.
Tax Rates are quoted as the amount of taxes on the property for each $1,000 of Net Taxable Value. For example, if the Tax Rate is $5.00 and the Net Taxable Value of a property is $1,000,000, the Taxes Owed would be $5,000.
The following are the Kauai County Tax Rates for the fiscal year from July 1, 2019 to June 30, 2020:
- Residential – $6.05
- Residential Investor – $8.05
- Vacation Rental – $9.85
- Commercial – $8.10
- Commercialized Home Use – $5.05
- Industrial – $8.10
- Agricultural – $6.75
- Conservation – $6.75
- Hotel/Resort – $10.85
- Homestead – $3.05
||Deadline for filing exemption claims and recordation of ownership documents
||Assessment set for use during next tax year
||Assessment notices mailed
||Deadline for assessment appeals
||Second half year tax bills mailed
||Second half tax year payment is due
||Certified assessment roll to County Council
||Tax Rate set by County Council
||Tax Year Commences
Deadline for filing dedication petitions
||First half year tax bills mailed
||First half tax payments due