Oahu residents generally have a low property tax rate compared with other states.  Still, we want to take advantage of the tax exemptions available to owner occupants.

Owner Occupant Exemptions

One exemption is available for owner occupied residences, amounting to $80,000 (tax assessed value).  The exemption applies to single persons and to married couples.  For married couples, the exemption is still $80,000.  If the couple owns more than one property, the exemption can be used on only the property the couple owner-occupies.

When the owner (or oldest spouse, for couples) reaches age 65, the exemption can increase to $120,000.  I say "can increase" because the office will adjust your exemption if it has your birthdate on file. If the office doesn't have your birthdate, it's up to you, the owner to file for the increased exemption with Honolulu's Real Property Tax Division.   I'd rather play it safe and file for the increased exemption.  It's a simple form to fill out and send to the Property Tax Office.   Here's the link to the Home Exemption form.

If a married couple owns two properties, one spouse owner occupies one and the other owner occupies the other, the $80,000 exemption shall be split 50/50 or allocated based on assessed value. Allocating an exemption based on assessed value, that would be an interesting situation to workout with a spouse and the tax office!  I think I would rather let a spouse take the exemption.

Multiple Exemptions are Possible

If a property has multiple dwellings and an owner-occupant is on title, he or she can qualify for the homeowners exemption.  As an example, large older lots sometimes have more than one home or perhaps an ohana home with two legal living spaces.  Each owner of record (not husband and wife) can file for the homeowners exemption.

Persons who are disabled can file for an additional $25,000 exemption.  Unlike the other exemptions, the $25,000 exemption is per person.  A disabled couple can file for two $25,000 exemptions in addition to the $80,000 exemption for a total of $130,000.  

Disabled Veterans

For totally disabled owner occupant veterans, an exemption of all but the minimum property tax ($300 per year) is available.  The claimant must file form P-6 with a certificate of disability from their doctor.   The exemption will be effective beginning on the next property tax payment date.  The exemption will stay in effect as long as the veteran remains totally disabled. Widows and widowers of disabled veterans with the exemption are allowed to continue using it as long as they remain unmarried.

Totally Disability Defined

A person who is totally and permanently disabled, either physically or mentally, which results in the person's inability to engage in any substantial gainful business or occupation. For example, medically-certified heart attack or stroke victims, unable to engage in any substantial gainful business or occupation may qualify for this exemption.

Other Possible Exemptions

The City and County of Honolulu offers an exemption for historic residential properties.  The City's website does not have a link for the application form and the process is not an easy one.  If you buy a historic residence, carefully note the conditions required to maintain the exemption.  If you want to apply, your home will need to be an older classically styled home and having view channels from the street.  If the view to the home is blocked by walls, large trees etc. it will not meet the standards.

Low Income Rental Housing

This is the only exemption discussed that does not relate to owner occupants.  This exemption is available to property owners who offer at least 20% of their rentals to low income tenants.  Vacation rentals and timeshares do not apply.  The low income rentals must have kitchens suitable for cooking and washing dishes.  Exemptions may be claimed under Hawaii Revised Statutes (HRS) 53 38.

Aloha, Mike

Mike Bates (Realtor Associate)
RS-54129
CENTURY 21 iProperties Hawaii
1585 Kapiolani Blvd #1533
Honolulu, HI 96814