Maui Property Taxes 2021-2022 Update

Maui Property Taxes 2021-2022
Changes: Classifications & Rates

Each year, Maui County does two things: assesses the value of the property AND sets new rates for the upcoming fiscal year, which runs from July 1st-June 30th.  Also of note is the passing of Bill 129 (effective 2022) which provides an exemption for properties being rented long term and Bill 130 (effective 2021) which changes definitions relating to Non-Owner Occupied properties and Short-Term Rental classifications.

How do you calculate your property taxes given the new tiered system?

Fidelity National Title put together this helpful video when the new tiered system was introduced in 2020.  

Maui County Property Tax Rates 2021-2022 vs Prior Years

Rates are per $1000 of assessed value.  In 2020, the County introduced a new Tiered assessment.  Prior to that, there was a flat rate per the classification.

Maui Property Taxes: how have they changed? 2021 vs. 2020

• Owner Occupied.  The rates went down for Tiers 1 & 2, and increased at Tier 3.  Tier 1 (-4%), Tier 2 (-2%), Tier 3 (+4%)
• Residential:  The rate remained the same for Tiers 1 & 2, and increased at Tier 3 (+16%)
• Short Term Rental: modest increases for all three tiers.  Tier 1 (+.27%), Tier 2 (+.63%) and Tier 3 (+1.08%)
• Hotel & Resort: +9.81%
• Timeshare: +1.39%
• Agriculture, Apartment, Commercial, Commercialized Residential, Conservation, Industrial: No Change

Keep in mind that the rate is just part of the equation.  While the rate may have gone up, the assessed value may have gone down.  In this scenario, there may be little change to the total amount of property taxes due from 2020 for home owners.  However, it may have gone up for those affected by Bill 130.  Read more toward the end of this post on Bills 129 and 130 and how they affect Maui Property Taxes.

Looking back over the past 5 years, the county has decreased the property tax rates for homeowners and apartment owners, and kept it fairly steady in others like Agricultural and Conservation zoning.  The largest increases have been to Short Term Rentals, Hotels & Resorts, and second homeowners.

What do Maui County Classifications mean?

Per the Maui County website*, the County of Maui details the classifications of real property as follows:

• Time Share – real property that is subject to a time share plan as defined in section 514E-1, Hawaii Revised Statutes.
• Non-owner-occupied - real property improved with a dwelling, as defined in the comprehensive zoning ordinance, that would not be classified as “owner-occupied”, “hotel and resort”, “time share”, “short-term rental”, “commercial”, “industrial” or “commercialized residential”.
• Commercialized Residential – real property that serves as the owner’s principal residence and has been granted bed and breakfast home permit, a short-term rental home permit, or a conditional permit allowing a transient vacation rental use.
• Short Term Rental – lodging or dwelling units occupied by transient tenants for periods of less than six consecutive months, including real property that does not serve as the owner’s principal residence and has been granted a short-term rental home permit or a conditional permit allowing transient vacation rental use without regard to its highest and best use and cannot qualify for a home exemption.
• Apartment – multi-dwelling-unit improvements containing five or more dwellings that would not be classified “short-term rental”.
• Hotel and Resort – properties occupied by transient tenants for period of less than six consecutive months, have eight or more lodging or dwelling units and employ more than twenty full time persons.
• Owner-occupied – properties owned and occupied as a principal home and for which a home exemption was filed and granted.

No definition was provided for Commercial, Industrial, Agricultural or Conservation.

Property is classified based upon its highest and best use. Properties receiving home exemptions, condominiums, permitted bed and breakfasts and permitted transient vacation rentals are exceptions. Condominiums are classified upon consideration of their actual use (Non-owner-occupied, Commercial, Short-term rental, Timeshare, Owner-occupied). 

*This information taken from https://www.mauicounty.gov/755/Classification-for-Tax-Rate-Purposes as of the date of this post.  It is subject to change.

Important Dates

• July 1—Tax year commences. Taxes are calculated based upon January 1 assessed values and fiscal year tax rates.
• July 20 — First half of fiscal year tax bills mailed.
• August 20 — First half of fiscal year tax payments due.
• September 1 — Deadline for filing dedication petitions.
• December 1 — Condominium AOAO use declaration.
• December 31 — Deadline for filing circuit breaker applications for the next fiscal year.
• December 31 — Deadline for filing exemption claims and ownership documents.
• January 1 — Assessed values established for use during the next tax year.
• January 20 — Second half of fiscal year tax bills mailed.
• February 20 — Second half of fiscal year tax bills due.
• March 15 — Assessment notices mailed.
• April 9 — Deadline for filing appeals.
• May 1 — Certified assessments forwarded to the County Council for budget purposes.
• June 20 — Tax rates established by the County Council

For additional information, all dates to remember, and appeals information visit the Maui County website

Maui Property Tax: What has Changed for 2021 and What is Changing for 2022?

Change of Classifications

As Maui's property tax assessments were mailed out in Spring of 2021, I received several inquiries from condominium owners about a change to their property tax classification.  This change was brought about by the passing of Bill 130 (Ordinance 5160)

Per the Maui County property tax website: "Property is classified based upon its highest and best use. Properties receiving home exemptions, condominiums, permitted bed and breakfasts and permitted transient vacation rentals are exceptions. Condominiums are classified upon consideration of their actual use (Non-owner-occupied, Commercial, Short-term rental, Timeshare, Owner-occupied)."

What Changed?

Two important bills were unanimously passed in December, 2020: Bill 130 (Ordinance 5160) and Bill 129. Bill 130 took effect immediately upon its approval and applies  to the 2021/2022 tax year.  Here are important changes

1. Bill 130

Bill 130 amended the Maui County Code relating to classification of Real Property, particularly as it relates to Non-Owner Occupied Properties and condominiums where Short-Term Rentals are permitted.

'Non-Owner Occupied Classification:'

Non-owner-occupied. [Only those units] Units occupied by the owner for personal use where transient vacation rental use is prohibited by the comprehensive zoning ordinance or units occupied by a lessee for a term of at least six consecutive months or more [will be classified as "non-owner-occupied."]"

Short Term Rental Classification:

Short-term rental. Unless classified as "time share," "hotel and resort," or "commercialized residential," lodging or dwelling units, as defined in the comprehensive zoning ordinance, occupied by transient tenants for periods of less than six consecutive months. [will be classified as "short-term rental,"] including properties granted a short-term rental home permit or conditional permit allowing transient vacation rental use and units occupied by the owner for personal use or are vacant where transient vacation rental use is allowed by the comprehensive zoning ordinance. 

Material to be repealed is bracketed. New material is underscored."--source Bill 130 (Ordinance 5160) 

Effectively, this changes the classification for owners of condominiums that used them as second homes and did not rent them short term from "non-owner occupied" to "short-term rental" where vacation rentals are permitted.

2. Bill 129

In an effort to bolster housing for local residents, the county passed Bill 129 which creates an additional tax advantage to someone choosing to rent their property on a long term basis.  This bill essentially creates a "long-term rental" tax classification and exemption.  

The long-term-rental exemption form is available with other forms at: https://www.mauicounty.gov/1953/RPA-Forms-andInstructions. The deadline to file for the long-term rental exemption is December 31, 2021 

Information pulled from multiple county sources (MauiPropertyTax.com, Mauicounty.gov and the Municipal Code as of the date of this post.  However, it is subject to change as these websites are updated.  Please check with the County of Maui's real property tax division with any questions or to verify what rate applies to your property.  This post is informational in purpose and does not constitute legal or tax advice.