Oahu Property Taxes for Fiscal 2020 to 2021

The Honolulu Real Property Tax is an added cost of owning real estate in paradise. This tax contributes to Oahu’s roads, parks, safety and more. But what are the Oahu Property Taxes for the Fiscal Year 2020 (from July 2020 to June 2021)? Did you know that Honolulu Country actually has one of the lowest property tax rates in the United States? Learn all about Honolulu property taxes from our handy guide.

What are the Oahu (Honolulu County) Property Taxes?

The residential real estate tax on Oahu, which comprises all of Honolulu County, is classified into ten classes, as of July 1, 2020:

• Residential (Class A)
• Residential A (Tier 1 and 2) (Class I)
• Hotel and Resort (Class B)
• Commercial (Class C)
• Industrial (Class D)
• Agricultural (Class E)
• Preservation (Class F)
• Public service (Class G)
• Vacant Agriculture (Class H)
• Bed and breakfast home (Class J)

If you live in a home or own a home that rents to other people, you will typically fall into one of the following four classes of Honolulu Property Taxes.

(1) Residential: 0.35% of assessed value (or $3.50 per $1,000 of the net taxable real property value). This July 1, 2020 through June 30, 2021 (Fiscal Year 2020), the rate applies to homes where the owner lives as their primary residence and to homes with an assessed value of less than $1million.

A homeowners exemption can be claimed if the home is the owner’s primary residence. This exemption gives the 0.35% property tax rate whether the home is worth $2million or $350,000 – and also gives a sizable exemption amount:

• The standard home exemption amount is $100,000 (formerly $80,000).
• 75 to 79 years of age: $140,000
• 80 to 84 years of age: $160,000
• 85 to 89 years of age: $180,000
• 90 years of age and over: $200,000

You must prove that the home is your primary residence by filling out an application and show evidence that you are registered to vote in Honolulu, file an income tax return as a State of Hawaii resident, or occupy the home 270 days or more each calendar year.

An example of the Honolulu Residential property tax rate:

A 40-year-old owner lives in a property with an assessed value of $1,200,000. According to his age, he has a $100,000 exemption, so his estimated yearly taxes are $3,850. (($1,200,000-$100,000) x 0.0035)

(2) Residential A: 0.45% of assessed value up to $1,000,000 (Tier 1) and 1.05% of the assessed value above $1,000,000 (Tier 2). The Residential A Honolulu Property Tax Rate applies to properties where an owner doesn’t claim the home exemption and the total assessed value is more than $1,000,000.

An example of the Honolulu Residential A property tax rate:

A 50-year-old woman has a $1,200,000 beachfront property as her second home in the quaint Hau‘ula on Oahu. Since this is her second home, she does not have an exemption. The estimated annual Oahu Property Taxes up to $1,000,000 are $4,500 ($1,000,000 x 0.0045), and the yearly property taxes above $1,000,000 are $2,100 ($200,000 x 0.0105). Therefore the total taxes for her second property are $6,600 per year ($2,100 + $4,500).

(3) Hotel & Resort: 1.39% of assessed value. This tax is imposed on zoned hotel and resorts as well as transient vacation units. Prior to fiscal year 2020, the Hotel and Resort tax might have been imposed on all short-term vacation rentals, such rooms rented on Airbnbs, but starting July 1, 2020, transient vacation units will be in this existing hotel-resort tax class while bed-and-breakfast establishments will have their own tax class (Class J). If you are not using a Hotel & Resort zoned condo as a hotel, you can apply to have your property reclassified to residential.

An example of the Hotel & Resort property tax rate:

A couple owns a $900,000 tax-assessed property in a Waikiki condo-hotel and rents it out every week to tourists. The estimated annual Honolulu Property Taxes are $12,510 ($900,000 x 0.0139).

(4) Bed and breakfast home: 0.65% of assessed value. This new property tax classification was created in December 2019 by Mayor Kirk Caldwell.

Bed and breakfasts are defined as rentals of less than 30 days where the homeowner or another operator is present during the stay. A typical B&B might be when someone has a room rental on Airbnb in their own home where they live. Transient vacation rentals (TVRs) are defined as “unhosted” or “whole home” rentals of less than 30 days, where an owner or operator is not present; TVRs are taxed in the hotel & resort class at 1.39%.

It is expected that the Department of Planning and Permitting will soon allow up to 1,700 new rentals on Oahu. This new bed and breakfast tax rate will be a part of the City and County of Honolulu’s new clarifications and regulations concerning short-term vacation rentals.

“This next phase allows 1,700 hosted short-term vacation rental units to be registered and permitted starting in October 2020,” Caldwell said in a press conference in December 2019. “It’s only fair that owners who operate their home as short-term vacation rentals pay a higher real property tax rate than the residential category. We must not forget that those who are offering their homes as short-term vacation rentals are operating a business in our residential neighborhoods.”

An example of the Bed and Breakfast property tax rate:

A family owns a $1,200,000 tax-assessed property in Kaneohe. They were lucky to be one of the permitted homes to rent a short-term vacation rental to visitors. They now rent out a room in their house on Airbnb to typically single travelers. The estimated annual taxes are $7,800 ($1,200,000 x 0.0065).

Before they were classified as a bed-and-breakfast property, they were paying the residential property tax, which was $3,850 (($1,200,000 - $100,000) x 0.0035). Therefore, they are now paying $3,950 more annually in Honolulu Property Taxes since they rent a room on Airbnb and are classified as a legal Bed and Breakfast property.

In addition to these popular Honolulu property tax rates, there are a number of other Oahu property tax rates:

How is the tax assessed value of my Hawaii home determined?

The tax assessed value of a home is often different from the price a buyer will actually pay.Typically, no one visits your home to determine its assessed value.

Instead an appraiser from the Honolulu Tax Office will typically analyze five comparable properties sold prior to July 1 of that tax year. On October 1, the assessed value from the appraiser will be used to calculate property taxes due the following fiscal year (July 1 to June 30).

For a newly constructed home or condo without a recorded sale, the appraiser from the Honolulu Real Property Assessment Division will calculate building costs, typically if the condo building project is less than 75% complete. If the project is 95% complete and comparable sales are available from a similar building, then the appraiser may use those comparable sales to determine an appraised value.

Assessed values can be contested – but be sure you have recently sold data to back up a claim. Properties listed for sale and market swings do not affect appraised home values. Appeals can be filed from December 15 to January 15.

How do I pay Oahu Property Taxes?

In Honolulu County, on the island of Oahu, taxes are due in two equal installments throughout the fiscal year (July 1 to June 30).

The first installment is due on August 20 (includes taxes from July 1 to December 31), and this bill will be mailed in July. The second installment is due on February 20 (includes taxes from January 1 to June 30), and this bill is mailed in January.

If August 20 or February 20 is a holiday, Saturday, or Sunday, then you have until the next business day to pay. Also, a property owner may pay for the entire year at the first property tax bill; you do not have to wait to pay the amount in the February 20 bill.

There are four ways to pay your taxes to Honolulu County:

1. Online: Go to www.hnlpay.com and pay with a credit card (2.35% fee) or debit card (1% fee).
2. Phone: Call 1-877-309-9117.
3. Check: Mail a check made out to “City & County of Honolulu” to City & County of Honolulu, Real Property Tax Collection, Division of Treasury, P.O. Box 4200, Honolulu, HI 96812
4. In Person: Pay with cash or check by visiting the City Hall on South King Street in Honolulu.

Make sure you pay on time, as interest at a rate of 1% is applied for each month of delinquent taxes. Honolulu City & County may also charge additional penalties.

I am a new homeowner! What do I need to know about Honolulu Property Taxes?

If you are a new homeowner living on the property, be sure to file your tax exemption. Note: Address changes may take up to four months. The Honolulu Tax Department can be reached at 808-768-3980 to update tax bill mailing addresses. Homeowners can also conveniently track their property taxes online.

Paying Honolulu property taxes helps to ensure that our Honolulu City & County roads, parks and other public services are available – and it’s nice to know that the paradise tax on property is relatively low compared to the U.S. Mainland.