Council Vice-Chair Keani Rawlins-Fernandez issued a statement today lauding the announcement earlier this week that the Department of Finance will begin accepting applications and implementing the council’s latest effort toward tax reform. The ordinance provides an exemption of up to $200,000 for homeowners who qualify by renting long-term and a new tax classification and corresponding tax rate for long-term rentals.

Rawlins-Fernandez said the ideas behind Ordinance 5159 arose in the 2019 temporary investigative group on tax reform, which she chaired. Following last year’s ordinance establishing tiered tax rates, the ordinance on long-term rentals is the second major law arising from the reform group, which focused on addressing the housing shortage with solutions including tax policy.

“Maui County’s median home price is approaching a million dollars, and, with no decrease in sight, the lack of affordable long-term rentals continues to be an obstacle for residents facing the housing shortage plaguing our county,” said Rawlins-Fernandez. “I’m pleased this second phase of tax reform will be implemented, and I look forward to the council’s next tax reform action to incentivize affordable, long-term housing for our residents.”

Economic Development and Budget Committee Report 20-149 described the new ordinance as “one exception to the highest and best use requirement” that normally applies to property taxes. Even if a property’s zoning designation would normally dictate a higher rate of taxation, if an owner provides documentation that shows a property is being used as a long-term rental, the property could be reclassified as long-term rental, allowing for a lower rate, the report said.

Rawlins-Fernandez said she commends her colleagues for the united effort at tax reform, including Councilmembers Tasha Kama, Alice Lee and Tamara Paltin, who served on the temporary investigative group with her. She also said she’s grateful for members of the public who’ve testified for tax reform, including Jason Economou of the Realtors Association of Maui, who described the classification for long-term rentals as “great” in a committee meeting on Nov. 9.

Rawlins-Fernandez urged homeowners who rent a portion of a property or an entire property long-term to apply now through Dec. 31, 2021 for the tax exemption, noting the following details of the new exemption for long-term rentals:

• Effective Jan. 1, 2022, real property with a residential lease of at least 12 months may qualify a property owner for an exemption of up to $200,000.
• Real property with a home exemption that also qualifies for the long-term-rental exemption may be eligible for an additional $100,000 exemption and classified as owner-occupied.
• The exemption may be allowed for multiple homes if located on separate parcels.
• If property taxes are delinquent for more than a year, the rental exemption will not be allowed. Any change in the actual use of real property must be reported within 30 days.

To apply, visit www.mauipropertytax.com. The application form must be filed by Dec. 31, 2021, along with a signed copy of a lease contract, to qualify for the 2022 tax year.

Property owners may contact the Real Property Assessment Division by calling (808) 270-7297 with any questions, or by email at: rpa@co.maui.hi.us.