Change to Maui Homeowner Exemption

In June 2011, the Maui County Council Budget and Finance Committee voted unanimously to lower Maui’s homeowner property exemption to 2005 levels. Homeowner exemptions give homeowners a tax break by reducing the assessed value of a home occupied as a residence. If approved by the full City Council, the Committee’s recommendation would mean that the exemption, currently set at $300,000, would be reduced to $200,000. This reduction would take effect in July 2012 and would provide the county with an additional $5.3 million in property taxes if the tax rate were to remain the same.

Since 2003, Maui’s homeowner exemption was raised several times in an attempt to provide relief from skyrocketing property values. In fact, the exemption increased from $50,000 to the current $300,000 in just three years. However, Maui real estate values are now declining and are expected to continue to do so by another five to 10 per cent over the next year. Since declining property values result in lower tax revenues, a reduced exemption would help to offset the lower property values.

However, even when reduced to $200,000, Maui’s homeowner property exemption would still be the highest in the state, with the next highest exemption of $80,000 available in Honolulu. Kaui and the Big Island offer even lower homeowner exemptions, with their basic exemptions set at $48,000 and $40,000 respectively. In addition to offering the highest homeowner exemption, Maui also has the state’s lowest tax rate at $2.50 per $1,000 of assessed value. Again, Honolulu comes in second with a tax rate of $3.42 per $1000 of assessed value.

While Maui’s homeowner property exemption, even if reduced to $200,000, compares very favorably to the rest of Hawaii, it also compares favorably to the rest of the country. Los Angeles and San Francisco, for example, offer maximum homeowner exemptions of $7,000. With a maximum of $12,000, Chicago offers a higher exemption than California’s major cities and yet still falls far below Maui’s exemption. While it is possible to find higher exemptions on the mainland, such as the State of Idaho’s maximum exemption of $92,040, Maui’s exemption still remains significantly higher, even with the recently recommended reduction.

Tags