Do You Own A Long-Term Rental Property On Maui?
Did you know that one of the new benefits of owning a long-term rental property on Maui is the long-term rental property tax exemption effective January 1, 2022? Properties that are renting for a minimum of 12-month lease terms and do not have a home exemption will be eligible for a $200,000 long-term rental exemption and will be classified as Long-term Rental.
Requirements To Apply:
- The property must be occupied by the same tenant for a minimum of 12 consecutive months.
- You must provide a copy of the signed lease agreement to the Maui County Property Tax Department.
- You must submit the Long-term Rental Exemption Application form found under “Exemption Forms” at the Real Property Assessment Division website.
There is a main house and ohana rented long-term, but separately to different tenants on the same property? Then one exemption may be granted for the entire property for $200,000.
You already have a home exemption because you occupy a portion of the property and rent out a separate portion? Then you will be eligible for a $100,000 long-term rental exemption in addition to the home exemption, and your property will still be classified as Owner-Occupied.
A portion of the property is used for commercial purposes? Then the commercial portion will not be entitled to an exemption. Only the portion used exclusively for a long-term rental will be entitled to an exemption.
If you missed the 2022 application deadline on December 31, 2021, then be sure to apply before December 31, 2022 to receive the 2023 exemption.
Want to see if your investment property pencils out to carry its own costs?
Many home buyers that have been priced out of the market are still in need of housing, increasing the demand for rental properties on Maui. Similar to the real estate market surge we are currently experiencing, the long-term rental rates continue to quickly rise. Find out if your investment property purchase will cover its own costs in rental income. Be sure to account for the new long-term rental property tax exemption.
Want to Know More?
Contact me if you want to request a proforma and estimated costs for owning an investment property on Maui. I am happy to share best practices for long-term rental ownership based on my 10+ years of local property management and real estate sales experience on Maui.