Consider the benefit of owning real estate in tropical paradise, while still living in the United States! Add to this the opportunity for year-round amazing weather and some of the lowest property taxes in the nation.
Recent changes to the Maui County Tax Rates for Owner Occupied, Second Home, Long-Term Rentals and Short-Term Rentals are depicted in this chart:
There are other tax classifications for Maui County, but for this article, we will focus on these four.
In addition to these low tax rates, there is also the potential to reduce the assessed value of an Owner-Occupied or a Long-Term rental property by $200,000.
Example:
An owner-occupied single-family home on Maui is assessed for $950,000. At a possible tax rate totaling $2.00 per thousand, and with the owner-occupied exemption of $200,000, the assessed value drops to $750,000 and the potential MAUI PROPERTY TAXES FOR ONE YEAR WOULD BE APPROXIMATELY $1,500.
($950,000 – $200,000 = $750,000 assessed value. 750 x $2.00 = $1,500 per year. This represents an annual tax savings of approximately $400.00).
Qualifications for a Home Exemption To Be Met Annually
from the Maui County website
a) The owner must occupy the Maui County home for which the exemption is being claimed for more than two hundred seventy (270) calendar days of each calendar year.
b) Owner must not rent the entire premises for any portion of the year.
c) Owner must file an income tax return as a resident of the State of Hawaii with a reported address in Maui County the year prior to the effective date of the exemption. Non-resident and part-year resident State of Hawaii income tax returns do not qualify for the home exemption.
d) The property taxes must not be delinquent.
e) The deadline to file a claim for home exemption is December 31 of the preceding assessment year.
The exemption will take effect January 1 after a claim has been filed. The change in taxes will take effect on the subsequent July 1.
See a more complete list here.
Qualifications for a Long-Term Rental Exemption To Be Met Annually
from the Maui County website
a) The unit must be occupied as a long-term rental for twelve (12) consecutive months or longer to the same tenant on January 1 of the assessment year.
b) You must apply for the exemption by December 31 and attach a copy of a signed long-term lease agreement.
c) There must not be taxes delinquent for more than 1 year.
d) The exemption will begin on January 1 of the upcoming assessment year. It will be reflected in the subsequent July real property tax bill.
e) You need to reapply every year if the lease agreement ends by December 31 of the assessment year.
f) Condominiums rented long-term that are one unit, regardless of zoning, would qualify for the $200,000 long-term rental exemption.
See a more complete list at here.
I have a client who owns a single-family owner-occupied home as well as four long-term rental properties comprised of two condos, one townhome and one single-family home. This client has applied for all 5 exemptions, and expects to enjoy a combined one million dollars of reduced assessed value that taxes will be paid on.
The Expected Breakdown
The $200,000 exemption for the owner-occupied dwelling assessed at Tier 1, equals 200 x $2.00 = $400 per year in expected tax savings.
A $200,000 exemption times 4 rentals assessed at Tier 1, equals $800,000 in total long-term rental exemptions. 800 x $3.00 = $2,400.00 per year in expected tax savings.
$2,400 plus $400 equals a total of $2,800 in expected tax savings for the year.
As an expert in Maui real estate, Rick has closed nearly 40 million in sales, representing both buyers and sellers since moving to Maui in 2014. Rick is positioned to offer a high level of customer service to those who desire to experience the unique tropical adventure available in Maui, Hawaii.
Call, text or email Rick at your convenience for more assistance.
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