There has been a brewing argument over property taxes and who is paying most of them for some time in Hawaii due to new legislation requiring second home owners to help pay for teacher salary increases for local schools in the state.
The argument came to a head recently when the state did an actual tally of how many out of state homeowners were paying for Hawaii property taxes. The answer? One third.
Government needs tax revenue to pay for city services and it can’t pay for those services through excise taxes and user fees alone. With land in Hawaii valued at over $335 billion, Hawaii collected $1.7 billion through property taxes in fiscal year 2016-2017 alone, according to the Real Property Assessment Division.
If you think that just because Hawaii has an overall higher cost of living than that in the Mainland, that we may have some of the highest property taxes in the nation, think again. Hawaii, along with Alabama, Louisiana, and Delaware have the lowest property tax rates in the country. Meanwhile, New Jersey, Illinois, New Hampshire, and Wisconsin have the highest rates.
What do our property taxes pay for you may ask? A bevy of community services that many people take for granted. Here is a list of a few:
- animal control police
- community centres sewers
- emergency plans
- fire service
- heritage planning
- local road maintenance
- police protection
- safe building regulation
- safe drinking water
- sewage treatment
What makes Hawaii different is that with a full ⅓ of the state’s property owners living out of state, that these homeowners can neither vote nor utilize many of the state and city services.
Brian Collins, a partner with LUVA Real Estate Services says, “Property taxes are part of the responsibility of homeownership and we actually should be grateful that 1/3 of our property taxes are generated off island from people who are able to hold jobs and careers that pay much more than most of the jobs here on Hawaii Island. The Kohala Coast area alone generates most of the property taxes for our island which help our residents have many services they enjoy every day,”
John Laliberte, founder of LUVA Real Estate Services also adds, “As a real estate and vacation rental company, we help facilitate the second home market. These homeowners and taxpayers add value into the island’s economy and really do not take much out in terms of schools, roads, fire and police.”
The proposed tax bill to help pay for more teachers in the state would not affect those who purchase homes in Hawaii as their primary residence.
If you have questions about current affairs affecting real estate on Hawaii Island, LUVA Real Estate professionals are a resource, so please contact us at LUVA Real Estate to answer questions or help you with any of your home buying or selling needs.