Understanding Real Property Taxes
Each year Kaua’i residents make an investment in their County when they pay their real property taxes. Every dollar is returned in the form of vital services we often take for granted; services such as fire and police protection, civil defense, road maintenance, street lighting, sewer treatment, refuse collection, transportation, maintenance of parks and recreational facilities, housing projects, and elderly services and activities. While many of these services are partially financed through a variety of other revenue sources including federal and state grants, sewer fees, fuel taxes, motor vehicle weight taxes, transient accommodations taxes, and golf fees, slightly more than 80% of the County’s general fund revenue comes from real property taxes.
Real Property Tax Powers
Hawaii’s four counties were given the real property tax system in 1981 after voters approved a constitutional amendment transferring the responsibility for property valuation, exemptions, and tax collection from the State to the counties.
Assessments at Full Value
The need to insure “truth in taxation” brought about a major change in the way property has been assessed beginning in 1983. Prior to 1983, properties had been assessed at 60% of the fair market value. Beginning in 1983, however, real property began to be assessed at 100% of fee simple fair market value, making it easier for homeowners to see what their property is actually worth.
Fair Market Value
Locating, identifying, classifying and appraising your property at fair market value and approval of exemptions are the responsibility of the Real Property Assessment Division of the Department of Finance. Market value, or the price most people will pay for your property, is the standard used to measure equity in assessments. Over the years great strides have been made to improve the methods used to assess property in a uniform and fair manner. Property owners are encouraged to visit the Real Property Assessment Division located at 4444 Rice Street, Lihu`e, HI. You can inspect your records at the front counter or ask to speak to an appraiser regarding your assessment.
Appraising Your Property
County has a limited number of appraisers for approximately 37,000 parcels, a personal inspection of your property is normally undertaken at the time of construction, remodeling. "Mass Methodology” and “Market Modeling” are used to annually update your property value. The values established by the Real Property Assessment Division as of October 1 will be used during the following fiscal year, which begins July 1.
Classification of General classes for Tax Rate Purpose
The general classes are defined and definite established uses for tax classification are provided. The definite established uses provided are not exhaustive. If a property’s actual use is included in the definite established uses, the property shall be assigned to that class. If a property’s actual use is not found in the definite established uses, or a definite established use is not provided, the definitions as well as definite established uses are to be read together to properly classify a property. Property is classified based upon its highest and best use. Properties receiving homeowner exemptions are the exception. Properties which have been granted a homeowner exemption may be classified in one of two overclasses, "Owner-Occupied' or "Owner-Occupied Mixed-Use, " based upon all actual uses of the property. The general classes are defined and definite established uses for tax classification are provided.
Starting in 2017, properties that have been classified as Owner-Occupied or Commercialized Home Use for two consecutive years, have retained the same ownership, and not initiated any property characteristic changes shall have their assessed values limited to increases of 3%.
If you don't agree with the assessed value or tax classification on your assessment notice, any owner shall first appeal to the Real Property Tax Division Board of Review. The taxpayer is asked to state their case and then the appraiser explains how the assessment was determined. There is a $75.00 fee to appeal, which must be paid to be deemed filed. You should remember that tax assessment appeals can only be made between December 1st and December 31st or within 30 days of a corrected assessment.
Many property owners regretfully do not question their assessment until they receive their tax bill. The first half of the year’s bill is mailed on July 20 and payment is due on August 20. The second half is mailed the following January 20 and payment is due on February 20. There is no avenue for appeal after you have received your bill. Even though you have an appeal pending, you must pay all taxes by the due dates, or you will be charged penalty and interest.
Another important time frame is the period when assessment notices are mailed to property owners. These notices are mailed each year by December 1. You have until December 31 to appeal your assessment. When you receive your notice, study it carefully. It lists your tax classification, property value, exemptions and net taxable value. If you find an error or have questions on your assessment, contact Real Property Assessment office.
Calculation of Taxes
The formula for real property taxes is:
(Assessed Value-Exemptions) x Tax Rate = Taxes
After the assessment of the property has been made, and any exemptions subtracted from the assessed value, the remaining value is known as the net taxable value. This is the starting point for the calculation of taxes.
As part of the budget-making process every year, the County Council sets the tax rates. The tax rates are set based upon the 'highest use' of all 'actual use' found on the property. The tax classes are: Non-Owner-Occupied Residential, Vacation Rental, Commercial, Industrial, Agriculture, Conservation, Hotel/Resort, Owner-Occupied and Owner-Occupied Mixed-Use. Vacant Land is assigned a tax rate based upon the underlying zoning, until such time as a use is established.
The Owner-Occupied class is made of properties which are used exclusively as the owner’s principal residence, no matter what the zoning is. The Owner-Occupied class is also awarded to 'primary residence' properties where all additional living units are qualified for the 'Long Term Affordable Rental 'program. Investment properties where all living units have been qualified for the Long Term Affordable Rental Program also receive the Owner-Occupied rate. The 'Owner-Occupied Mixed-Use' tax class is awarded to properties that have a 'primary residence' with qualified home exemption yet have additional uses on the property during the year.
The tax rate is the amount of taxes on the property for each $1,000 of net taxable value. For example, if the tax rate is $8.00 and the net taxable value is $100,000, the taxes would be $800.00.
Tax Map Key Is Important
Homeowners should know their tax map key number, which is also referred to as Parcel ID number. Real property is mapped and indexed numerically according to a tax map key system which identifies your property. To expedite customer service, all matters concerning your property should be made in reference to the tax map key number.
Tax Map Information
Tax maps may be ordered from Real Property Assessment office either in person or by mail. The Maps cost $3.00 each plus $1.00 postage and handling per copy. When ordering maps through the mail, be sure to include your name and complete mailing address in the request. List the zone, section and plat of the maps ordering. Parcel and CPR numbers are not necessary. For each plat map ordered, provide the of prints being requested. Make your check payable to the director of Finance (do not send cash). Mail your check to: COUNTY OF KAUAI, TAX MAPS SECTION, 4444 Rice St. Suite 454, Lihue Hi 96766-1326. You may also visit our online website www.kauaipropertytax.com to view the maps via parcel number.