Oahu Real Property Tax Exemptions Increase in 2020

Several big property tax changes will be put into place starting July first of next year. By learning more about these changes, you will be better prepared to take full advantage of these tax changes while also planning your real estate finances accordingly. Here is a look at the major property tax changes you can expect in Oahu for 2020.

Residential Rate A Changes

Residential properties other than those that serve as your principal residence with an assessed value of $1 million or more will be taxed at a rate of $10.50 per $1,000 of the assessed value. This applies to all of the following property types:

  • Condo units without the Home Exemption
  • Residential lots zoned R-3.5, R-5, R-7.5, R-10, R-20 containing one or two single-family homes without the Home Exemption
  • Residential vacant lots zoned R-3.5, R-5, R-7.5, R-10 and R-20

As such, if you own a residential property other than your principal residence with a tax assessed value of less than $1 million, your tax rate will remain the same at $3.50. This new rate only affects you if your property is valued at $1 million or more, with your blended property tax rate being $4.50 for the value up to $1 million and then at the rate of $10.50 for any portion assessed above the $1 million mark. 

Hotel and Resort Changes

If you own a property that is zoned as a hotel or resort, you will be taxed at a rate of 13.90 per $1,000 of the assessed value of the property in 2020. A new short-term vacation rental regulation, which may increase tax collection while also tightening the enforcement of zoning rules, will also be in effect. Therefore, even if you have a short-tem vacation rental, your property tax will increase by $1 per $1,000 of assessed value along with other properties that have been zoned as a hotel or resort. 

When exploring this tax and ways to change how your property is zones, it is important to remember that you can only rent the property for rental terms for less than 30 days per tenant if all three of these conditions apply:

  • The underlying zoning is “hotel/resort”
  • The unit has not been dedicated for residential use
  • The building house rules do not prohibit you from providing short-term vacation renting

If the underlying zoning is not “hotel/resort”, three exceptions may allow you to offer short-term vacation renting. These include:

  • The individual condo has a valid Non-confirming Use Certificate
  • The condo building has ongoing active hotel operations and is exempt from requiring a Non-confirming Use Certificate
  • The property has a legal Bed & Breakfast license

Increase in Real Property Tax Home Exemption

The amount that an owner-occupant can claim for their principal residence has also been increased by $20,000 for all age groups. This means the standard home exemption amount went from $80,000 to $100,000. Specific age group exemptions for 2020 will be as follows:

  • 75-79: $140,000
  • 80-84: $160,000
  • 85-89: $180,000
  • 90 and up: $200,000

This change should bring some relief to property owners on a fixed income.

If you haven’t yet received it, the new tax assessment for the fiscal year 2020 should arrive soon. You may appeal this amount between December 15, 2019 and January 15, 2020.

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