Property Tax in Hawaii | 2022 FAQs

Hawaii is one of the most beautiful states, and it has also become an even more popular destination for families and couples looking to settle down. With so many people coming in, you’re going to want to think about property taxes.

Previously, Hawaii had no property tax in its state constitution. However, this changed in 1994 with the passing of a bill on the subject by both houses of Hawaiian Legislation under HB 1, which made Hawaii the first state without a property taxpayer’s bill of rights. The following are some of Hawaii property tax FAQs:

How much is the property tax in Hawaii?

The state of Hawaii sets the maximum amounts of property taxes you can be taxed at and sets limits on how much your taxes can increase year to year. Currently, you can only be taxed at the maximum rate of 1.0% for the years you’re taxed along with your first two marginal years.

How do you pay property tax in Hawaii?

You can only pay your property tax through your bank account or with a check. If you choose to have it automatically withdrawn from your bank account, the county sends you a notice with the amount they plan on withdrawing and how the payment should be categorized. You can then fill out the form they send you and provide them with your check or bank information along with the form.

How long do you have to pay your property tax in Hawaii?

Property taxes are due for payment on either the seventh or tenth business day of the month. Your county will send you a bill with the exact date when your taxes are due. Taxes can also be paid within 30 days from the original due date. For those paying their property tax within thirty days, it’ll be prorated at one-fourth of the original amount.

What’s a homestead exemption?

Hawaii has several counties and towns that allow an exemption from property taxes for disabled veterans, surviving spouses, and surviving children. These exemptions are called homestead exemptions, and the amount you can be exempt from varies depending on where you live. The amount an individual can receive also varies depending on what type your disability is. If you or your spouse have served in the armed forces for at least ninety days, you’re able to get a 100% exemption from property taxes.

What is the difference between a homestead exemption and a homestead tax cut?

It’s essential to understand the differences since they have different impacts on your property tax. A homestead exemption will come with reduced taxes within your county or town, but it’ll only be for some specific categories of tax breaks. For example, you can get a 100% exemption if you’re a disabled veteran. Still, you won’t receive an additional 100% reduction in your property taxes for the other taxpayers that live in that area. A homestead tax cut is much broader than a homestead exemption. If you receive a homestead tax cut, every taxpayer in that county or town will also have their property taxes cut. This allows everyone to have a better chance of not paying their property tax while still paying it. Unlike homestead exemptions, only the state can pass a homestead tax cut, and they’re usually used to help out residents during tough economic times.

How do you get a homestead exemption?

The application process for getting a homestead exemption is relatively straightforward. You register as disabled and then provide proof of your disability with either an official letter from the Veterans Administration or a letter that proves you’re receiving Social Security. Your proof of service will also come in handy if you want to apply for the veterans’ disability allowance federal benefit. You’ll need to fill out an application with the county, and you’ll be sent an offer letter.

What are the property tax exemptions for senior citizens in Hawaii?

Unlike most states, there is only one property tax exemption that all senior citizens in Hawaii receive. Seniors over the age of 65 or those with disabilities can apply for an exemption that’ll lower their property tax between 50% and 65%. The main difference between this exemption and other property tax exemptions is you don’t have to provide proof of your disability to get it. This is because it’s automatically given to those who qualify based on their age.

How much is the homestead exemption in Hawaii?

The maximum amount of money you can get for your homestead exemption in Hawaii is $30,000. You can only get this amount every two years. If you’re 65 years of age or older, you can also receive an additional 50% reduction on your property taxes. The maximum dollar amount you can receive for this exemption is $80,000.

What’s the property tax on an Olympic homestead?

If you decide to claim an exemption for the winter Olympics in your city or town, the exemption is tax-free until those games are over. Following those, they’ll be taxed at a rate of 0.3% for the years when they’re not hosting the Olympics until their next set of games.

How to calculate property tax in Hawaii?

It’s essential to understand how to calculate property tax in Hawaii since it can help you understand your taxes better. A tax rate of 0.3% means that for a $100,000 property, $3,000 will be taken annually as tax. If you want to get the amount you’ll need to pay each month, you’ll divide $3,000 by 12 and get a monthly payment of $250. You can then divide this monthly payment by 30 if you choose to have your money automatically withdrawn from your bank account. The minimum payment is $50.

 

Is property tax-deductible on my Hawaii return?

Unfortunately, you cannot deduct your property taxes for the years 2012 to 2016 in Hawaii because the state changed their policy on deductions the last year they would have been allowed to. You’ll be able to deduct them through 2017 only.

How can a property tax refund help you?

Many people who receive a refund check from the IRS aren’t sure what to do with it. It can cause them to lose out on thousands of dollars. A property tax refund is not the same as a cash refund, but it can effectively help you in some cases. If you’ve bought or sold something during the year that would have made your property value go up, you may be eligible for this refund. You’ll need to file a unique form, and it may take a while to receive the refund, but you should be able to save up to 10% of the property’s increase in value.

How do Hawaiian property tax deductions differ from federal and state income tax deductions?

Hawaii has a couple of property tax deductions that you cannot get for federal or state income tax purposes. When you’re filing your Hawaii taxes, there are two deductions that you cannot get. One of them is for property tax paid to the state, and another is for the cost of housing. If you’re paying rent or mortgage expenses on someone else’s home, this will not be a deduction in Hawaii. The other is the homestead exemption. You can claim a deduction for your regular or capital property taxes for federal and state income taxes. You can only take half of your homestead exemption.

What is the average property tax refund in Hawaii?

If you’ve been an active Hawaii homeowner over the last 30 years, you’re unlikely to receive any property tax refund from the government. The average amount of money you’ll receive in a year is $800, but that can vary significantly between counties or towns.

How much would you get as a homestead exemption in Hawaii?

The maximum amount you can receive for your homestead exemption is $50,000 in Hawaii. Unlike other states and counties, you aren’t required to provide any proof of disability to get this amount. You won’t be able to get this exemption more than once in five years.

What is a real property tax in Hawaii?

Since some Hawaii counties also handle their property taxes on a real estate market value system, it’s essential to understand what this means. When you’re using this type of assessment, you’ll base your property tax on the current value of the land or home. These values are taken from the sales prices in your area and can fluctuate quite a bit each year. Some counties only keep track of home or land values, while others have entirely switched over to this method.

How many exemptions can you get in Hawaii?

You can get two homestead exemptions in Hawaii. To receive the second one, one of the two exemptions you already received must be revoked, and the other must be transferred to another adult family member residing there full-time. If you’re not eligible for a homestead exemption, it’s essential to understand that this will cause your property taxes to go up even more than if you had no exemption at all.

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