West Maui Taxpayers Association
  • HOME
  • Olowalu Fire Station
  • WMTAPAC22
  • Affordable Housing
  • West Maui Lifesavers
  • Wall of Honor
  • Support WMTA
    • Membership - One Time Payment
    • Membership - Recurring Payment
    • Donations
    • Wills & Trusts
    • Charity Walk
  • Newsletter
  • Emergency Planning
  • News Blog
  • About Us
    • Goals & Objectives
    • Accomplishments
    • Board of Directors
    • WMTA vs WMIF
  • Contact
  • Subscribe

Enjoying Your Maui Resort Condo?  Now Pay Up!

6/7/2021

0 Comments

 
WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers ​to view the archives of the Tax Foundation of Hawaii's commentary click here.
Picture
Enjoying Your Maui Resort Condo?  Now Pay Up!
 
Some taxpayers on Maui are getting a nasty surprise this year because they didn’t do anything, and their real property tax rate doubled.

What happened?  The Maui County Council passed a pair of bills, known as Bills 129 and 130.  They were introduced on November 20, 2020, passed the Council on December 4, 2020, and were signed into law the very next day by Mayor Michael Victorino.  They became Ordinance 5159 and Ordinance 5160.

They say that if you have real property in an area in which the zoning laws permit short-term rental, and that real property isn’t your home, then it doesn’t matter if you live in it, or if no one lives in it.  It will be subject to Maui real property tax as a short-term rental.

On Maui, property tax rates are very modest for people living in their own homes.  There is a three-tiered system, with rates going from $2.51 to $2.61 per $1,000 of net taxable valuation (the value of the property after any applicable exemptions are subtracted).  For people in second homes or renting their units, there is a classification called “Non-Owner-Occupied” in which the rates go from $5.45 to $6.90 per $1,000.  But for short-term rentals, the rate is a flat $11.08 per $1,000.  That rate is slightly higher than Hotel and Resort ($10.70).  The only classification with a higher rate is Time Share, at $14.40.

Thus, for a unit valued at $800,000, an owner may see the real property tax bill for the year jump from $4,360 to $8,864, an increase of more than 100%.

If there is a long-term renter actually living in the unit, the owner gets a break, but only for 2021.  The short-term rental rate will kick in for 2022 regardless.

The County explains, in a FAQ page, that this change is based upon “highest and best use” and uses allowed by zoning.  Normally in the real property tax world, the tax classification of real property depends not on the actual use that is made of it, but on the highest and best use (generally this means the most expensive) that could be made of the property under the zoning laws.  So, if I decided to build a farm in the middle of an industrial zoned area, I can expect my property to be classified as industrial, not agricultural.  The County’s website goes on to give an example of Puamana, which is a community in Lahaina, a known resort area.  “Starting this year,” the FAQ says, “properties in Puamana are classified as Short-Term Rental, even if they are not rented short term.”  This, they say, is just another example of the highest and best use principle at work.

To explain why long-term rentals are getting a temporary break, the County explains:  “In an effort to address the County’s housing shortage, the County Council has created real property tax incentives to encourage property owners to rent long term to residents.  Next year, condominium classification is being rescinded altogether and will be replaced with a long-term rental exemption program.”  So, it seems that more comprehensive property tax changes are in the works for next year.

We can’t help but wonder why these two ordinances were passed at warp speed.  The interval between bill introduction and enactment was just over two weeks.  Was adequate time allowed for public input and consideration?  Was it just a knee-jerk reaction to the Transient Accommodations Tax aid to the counties being shut off in Gov. Ige’s emergency proclamations and with the prospect, in House Bill 862, of that revenue source being permanently cut off? 

Look out, folks.  The fiscal fallout from the pandemic and the State’s response to it is starting to bite at the county level, and this is one of several responses to that.  Let’s keep our eyes peeled, for more is yet to come!
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Picture

    RSS Feed


    If you wish to further discuss blog posts, please contat our office directly or contact us via Contact page.

    Categories

    All
    Affordable Housing & Homelessness
    Board
    Capital Improvements
    Charity Walk
    Commentaries
    Community Events
    Community Resources
    CON
    COVID 19
    Educational
    Emergency Planning
    Health & Safety
    HHARP
    Housing
    Infrastructure In West Maui
    In The News
    Kapalua Airport Runway Lights
    Kapalua Coastal Trail
    Lahaina Bypass
    Legislature Newsletters
    LLC
    Long Range Transportation Plan 2040
    Long-Range Transportation Plan 2040
    Makila
    MAUI CANCER CENTER
    Maui Cancer Center Llc
    Maui County
    Maui County Budget
    Maui County Dept Of Environmental Management
    Maui County - Dept Of Water
    Maui Destination Management Plan
    Press
    Public Safety In West Maui
    Real Property Tax
    Recycling Info
    TAT
    Tax
    Tourism
    Traffic & Roadways
    Transportation
    Video
    Vote
    Voting
    West Maui Community Plan
    West Maui Hospital
    West Maui Skate Park
    WMTA Annual Meeting
    WMTA Breakfast Events
    WMTA Candidates Night
    WMTA Disaster Preparedness
    WMTA Fundraisers
    WMTA Hot Topics
    Wmta Hot Topics Replay
    WMTA Membership
    WMTA PAC
    WMTA Sunset Sail
    WMTA Whale Watch

Quick Links: 

Home

News

About Us

Wall of Honor

Newsletter

Support WMTA
Emergency Planning

Contact

Copyright © 2021
Photo used under Creative Commons from wolfsavard
  • HOME
  • Olowalu Fire Station
  • WMTAPAC22
  • Affordable Housing
  • West Maui Lifesavers
  • Wall of Honor
  • Support WMTA
    • Membership - One Time Payment
    • Membership - Recurring Payment
    • Donations
    • Wills & Trusts
    • Charity Walk
  • Newsletter
  • Emergency Planning
  • News Blog
  • About Us
    • Goals & Objectives
    • Accomplishments
    • Board of Directors
    • WMTA vs WMIF
  • Contact
  • Subscribe