Maui County Council shaves property taxes for owner-occupied homes

New rates approved Friday by Maui County Council trim property taxes for most residents who live in their own homes. 

Owner-occupied rates of $2.41 at Tier 1 and $2.51 at Tier 2 per $1,000 of net taxable assessed value were shaved to $2 and $2.10, respectively. Owners at the highest Tier 3 remained the same at $2.71.  

Council voted 6-0 on Friday, with members Shane Sinenci, Kelly King and Mike Molina absent and excused, to set real property tax rates for the next fiscal year, which begins July 1. 

“It really was wonderful that this council is so aligned in its shared goals of providing tax relief to residents this year, and it’s reflected in this real property tax rates,” Council Vice Chairwoman Keani Rawlins-Fernandez, who leads the budget committee, said ahead of the vote. 

With the upcoming fiscal year, the classification of Long-Term Rental was added, and rates were set for owners who rent 12 consecutive months or longer. The new grouping is meant to incentivize long-term rentals, which are sorely needed.  

Meanwhile, tax rates were increased for non-owner occupied homes. About 70% of purchases in 2020 were non-owner occupied, second homes, according to Hawaiʻi Information Service. 

Non-owner-occupied rates of $5.45 for Tier 1, $6.05 for Tier 2 and $8 for Tier 3 per $1,000 of net taxable assessed value shot up to $5.85 for Tier 1, $8 for Tier 2 and $12.50 for Tier 3. 

Rates were flat for hotels and resorts, $11.75, along with time shares, $14.60. 

For short-term rentals, though, property taxes increased to a uniform rate of $11.85 across all three tiers. Last fiscal year, rates were $11.11 for Tier 1, $11.15 for Tier 2 and $11.20 for Tier 3. 

While council members supported the measure, some noted that tax policy and goals should be hammered out when the council is not up against hard deadlines during budget deliberations. 

The comments aligned with the testimony of Tom Crowley, a Maui resident, attorney, mediator and arbitrator.  

“There is policy that is set in these rates, and everyone understands that to some degree; however, the debate about that policy doesn’t really occur outside of budget as I feel that it should,” he said at the meeting. “Because we’re making decisions about policy in the middle of budget where your concern at that moment is balancing the budget, and you’re throwing an extra 50 cents onto one rate and reducing another rate. But then the question is what policy are we setting and are we achieving our goals.” 

Crowley said one example where council missed the mark is shown in the top tiers for owner-occupied homes and non-owner-occupied homes.  

The top tier for owner-occupied home valued at more than $3 million is $2.71 per $1,000 of net taxable assessed value. And the top tier for the non-owner-occupied home valued at more than $4.5 million is $12.50 per $1,000 of net taxable assessed value. That’s a $10 difference, Crowley emphasized. 

“As a policy, you’re saying that if you live here, and you’re very, very rich, we’re going to give you a huge, huge reduction in your property taxes,” he said.

Council Chairwoman Alice Lee said she agrees with Crowley’s testimony.  

“Perhaps next time we need to be more focused,” she said.  

The real property tax rates per $1,000 dollars of net taxable assessed valuation for each class of real property, effective July 1, 2022, are as follows: 

The real property tax rates per $1,000 of net taxable assessed valuation for each class of real property for the current fiscal year are as follows: