After years of buyers and owners of Maui County properties asking me about Maui County taxes, I am a few years behind in finally blogging about this so-called esoteric system; somewhat of an “ah ha” moment if you will. (Refer to the chart at the bottom of the blog as needed.) Currently, Maui County has 10 levels of tax assessment, from timeshares at the highest rate to homeowners at the lowest rate.
Example #1
Let’s review an example based on one of my favorite listings (MLS# 347163) in my neighborhood of Kuau. This property is on the water with views of multiple north shore surf spots and is on the coast of the world-famous downwind Maliko run for SUP, kiting, one man, paddle boarders, etc.
This property is listed at $3,500,000. Based on list price, many people may think that the assessment would be based on this, or 3,500,000 x $5.50 per $1,000. This would give us a tax bill of $19,250 with 1/2 of the payment due in February and 1/2 due in August.
However, the current assessed value on this property is $3,285,100, based on research on sales from staff at the County of Maui Property Tax Division. This would lower the tax bill a bit, saving the current owner some money for dinners in Paia. However, if it sells for less than the assessed value, then the new owner may hope for a future lower assessment.
Example #2
Example #2 is a property that I recently helped sell in Makawao (sorry no photos for privacy). This property sold for $467,500 this year. At the same time, the assessed value is $639,700 (wow—a $170,000 difference).
The current taxes would be residential again: $639,700 x $5.50 per $1,000. This would give us a tax bill of over $3,500. That may go down if other sales used for assessment go down in the future, however, the new buyers now may be owner occupants. They would need to submit a Homeowner’s Exemption Form to the County Tax Office by December 31, 2011.
Their future bill would then be based on homeowner status: $639,700 x $2.50 per $1,000, or a bill of $1,600. Wait, it gets better…the current homeowner exemption is $200,000. $639,700 (original assessed) – $200,000 = $439,700. Now $439,700 x $2.50 per $1,000 gives us a bill of $1,099. That’s better, right??
As of this writing in October 2011, the Maui County tax website shows this table for taxes based on assessed value:
|
Classification |
Land |
Building |
| Residential |
$5.55 |
$5.55 |
| Apartment |
$5.50 |
$5.50 |
| Commercial |
$6.25 |
$6.25 |
| Industrial |
$7.00 |
$7.00 |
| Agricultural |
$5.80 |
$5.80 |
| Conservation |
$5.60 |
$5.60 |
| Hotel and Resort |
$9.00 |
$9.00 |
| Homeowner |
$2.50 |
$2.50 |
| Time Share |
$15.00 |
$15.00 |
| Commercialized Residential |
$4.20 |
$4.20 |
Overview
From this brief example of a residential/homeowner instructional, I hope one can begin to process the relationship and difference between assessed value, list price, and purchase price. There are many more examples that I can help with depending on situations with agricultural assessments and the jump when a homeowner goes for a Bed and Breakfast permit and the tax consequences associated with that decision (possibly going from homeowner to hotel?? Yikes). I hope this helps.
Experience counts…As a Realtor, J.B. Guard has decades of experience with serving on Boards and Commissions in Maui County, the Realtors Association of Maui, working with top county officials and planners, etc. When it is your time to buy or sell Maui real estate, contact him directly.
These are huge investments. Do it right.
Aloha,
J.B. Guard
(808)-870-2227
john@hawaiilife.com
John B Guard IV, R(B)
October 31, 2011
Thanks John T,
Maui County has considered a tax system similar to Proposition 13 over the past few years while property values were increasing. We had similar situations with family properties being burdened with huge tax bills due to new high sales in resort areas, beach front areas, etc.
The County opted against the change in the system.
My home is a decent example. I purchased for $400,000 in 2001. Sales climbed rapidly and my tax assessment went up to over $1,000,000 and my tax bill jumped with it. Luckily I had the Homeowner Exemption ( discussed above) to lower the dollar value paid per $1,000. Other people in the neighborhood also used the “circuit breaker” which limits their property tax to a small percentage of Adjusted Gross Income on Income Tax forms. This has saved many oceanfront properties where families have owned for generations and had no income to justify the tax bill of $20,000 to $30,000 because a neighbor sold for $10,000,000 and all the home values sky rocketed.
Thanks for the blog comment. I appreciate it.
JB Guard
John B Guard IV, R(B)
October 31, 2011
Thanks John T,
Maui County has considered a tax system similar to Proposition 13 over the past few years while property values were increasing. We had similar situations with family properties being burdened with huge tax bills due to new high sales in resort areas, beach front areas, etc.
The County opted against the change in the system.
My home is a decent example. I purchased for $400,000 in 2001. Sales climbed rapidly and my tax assessment went up to over $1,000,000 and my tax bill jumped with it. Luckily I had the Homeowner Exemption ( discussed above) to lower the dollar value paid per $1,000. Other people in the neighborhood also used the “circuit breaker” which limits their property tax to a small percentage of Adjusted Gross Income on Income Tax forms. This has saved many oceanfront properties where families have owned for generations and had no income to justify the tax bill of $20,000 to $30,000 because a neighbor sold for $10,000,000 and all the home values sky rocketed.
Thanks for the blog comment. I appreciate it.
JB Guard