Hawaii's Real Property Tax rates

Recently a customer asked me some specific questions about Hawaii's real property tax rates.  Among other things, she was concerned that, upon buying a house here, the assessed value would increase significantly, leading to higher taxes.

This customer currently lives in California and she explained how it works there.  When a house is sold, the assessed value automatically adjusts to the sale price.  Real property taxes are assessed at one percent.  For the $500,000 house, annual real property taxes would be $5,000 per year.  Perhaps the original owner bought the house fifteen years ago for $150,000 and has been paying $1,500 per year in taxes.  That's some increase!

I did some checking on certain properties that this customer was interested in.  I quoted the taxes and she was still worried that the assessed values would increase when she bought a home here.

Further research and talking with a tax assessor in Honolulu shed some light.  The assessment process is based on comparable values in the area.  The tax assessor will look at similar homes and their sales prices.  Based on up to five comparables (comps) the assessed value is determined. 

Current tax rates for residential properties are $3.59 per $1,000 of assessed value.  A $500,000 home on Oahu would have annual taxes of $1,795.  On top of that, we have owner occupant exemptions that knock an additional $80,000 off the tax assessed value.  Homeowners age 65 years and above qualify for an additional $40,000 exemption, bringing the total to $120,000.

Another factor is that Oahu's assessed values generally lag behind market values.  Buy a $500,000 house and there's a good chance its assessed value is $450,000.  That's not always the case, your realtor should have that info readily available.

Resort-zoned properties have significantly higher tax rates, currently $11.97 per $1,000 of assessed value.  Keep that in mind when looking at condotels and vacation rentals.

On June 6, 2007 Honolulu's City Council voted to reduce our real property tax rates to $3.29 per $1,000 assessed value for improved residential property.  The rate may bring Oahu's tax rate down to 1/3 of 1%.  A lot less than what Californians and many others pay!

Update 2008

The City Council measure passed and Oahu's residential real property tax rate is now 1/3 of 1%.   Owner-occupant exemptions can reduce the rates even further for Oahu homeowners.  Resort zone property rates increased to $12.40 per $1,000 of assessed value.

Mike Bates Hawaii realtor

• Hawaii real property tax rate table

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