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UNDERSTANDING YOUR REAL PROPERTY TAXES
Derek S. K. Kawakami, MAYOR
County of Kauai
Department of Finance
REAL PROPERTY ASSESSMENT DIVISION
4444 Rice Street, Suite A-454
Lihue, HI 96766
Phone No. (808) 241-4224
FAX No. (808) 241-6252
- Each year Kauai 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, street maintenance and lighting, water, sewer and refuse collection, and recreational facilities and activities.
- These services are financed through a variety of revenue sources including federal and state grants water and sewer fees, fuel tax, motor vehicle weight tax and, most importantly the real property tax. The County of Kauai could not operate without the real property tax as approximately 45% of every revenue dollar collected comes from this source.
REAL PROPERTY TAX POWERS
- Hawaii’s four counties now have full control over their real property tax system after voters approved a constitutional amendment transferring the responsibility for property valuation, exemptions, and tax collection from the State to the counties.
- Since the transfer in 1981, the County of Kauai has worked to refine the real property tax system and has developed improvements to the law.
ASSESSMENTS AT FULL VALUE
- The need to insure “truth in taxation” has brought about a major change in the way property has been assessed beginning in 1983. Property is now being assessed at 100% of fee simple market value, making it easier for homeowners to see what their property is actually worth. Assessing at full market value eliminates the mathematical calculations and guesswork of the past.
FAIR MARKET VALUE
- Locating, identifying 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, Lihue, HI. You can inspect your records at the front counter or ask to speak to an appraiser regarding your assessment.
APPRAISING YOUR PROPERTY
- Because our County has only a few appraisers for approximately 35,000 taxable parcels, a personal inspection of your property is normally undertaken only at the time of construction or remodeling. The “Mass Appraisal Method of Valuation” is used thereafter, but your property is still given individual consideration. A computer is used to update your property value through a land and building indexing system.
- The appraisal process continues throughout the year, but the values established by the Real Property Assessment Division as of October 1 constitute the values which will be used during the following tax year which begins July 1.
- As a property owner you should be aware that there are homeowner exemptions which can reduce your net taxable value providing you occupy the property as your principal residence on September 30 preceding the tax year. These home exemptions are:
- BASIC HOME EXEMPTION – Homeowners not 60 years f age will be eligible for a single home exemption of $160,000.
- ADDITIONAL AGE EXEMPTION – This exemption was established to help senior citizens living on fixed retirement incomes. Homeowners between the ages of 60 and 70 are eligible for additional exemption amounts, where the Basic Exemption is increased to $180,000. For homeowners over 70 years, additional exemption amount is $200,000.
- ADDITIONAL HOME EXEMPTION BASED ON INCOME – Real Property which qualifies for the Basic Home Exemption and/or Additional Age Exemption may be entitled to an additional exemption of up to $120,000 provided the annual gross income of the owner-occupant(s), does not exceed the qualified Gross Income ceiling for that year. The gross income will change each January 1; contact the Real Property Assessment office for the current amount for the next taxable year. YOU MUST APPLY ANUALLY FOR THIS ADDITIONAL EXEMPTION.
- TOTALLY DISABLED VETERAN EXEMPTION – If you are a totally disabled vet—due to injuries received while on active duty with the U.S. Armed Forces, your home is exempted from all real property taxes, except the minimum tax of $150.00.
- DISABILITY EXEMPTION – Special exemptions of up to $50,000 are also available for property owners who are totally disabled, blind, deaf, or who are Hansen’s Disease sufferers. This special exemption is in addition to the basic and multiple home exemptions.
The staff of the Real Property Assessment Division will not automatically grant homeowner exemptions. You must file a claim on or before September 30 for the next tax year but, once filed, except for the additional exemption based on income, no additional action is required until your status changes. In addition to exemptions cited, there may be other types of exemptions which the Council may approve from time to time. Please check with the assessors office for more information.
- 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 land classification, property value, exemptions and net taxable value. If you find an error or have questions on your assessment, contact the Real Property Assessment Division.
- Should you want to appeal, you will find the process is quite simple and requires no legal counsel. Appeals are heard by a five-member Board of Review composed of property owners like yourself. The taxpayer is asked to state his case and then the appraiser explains how the assessment was determined. There is a $75.00 fee to appeal for all types of properties.
- Property owners may also appeal directly to the Tax Appeal Court, which could require legal assistance if you choose not to follow the small claims procedure or file your appeal with the Board of Review. An appraiser will be happy to explain the appeal process and your rights under the law.
- Many property owners regretfully do not question their assessment until they receive their tax bill. The first half of the tax 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.
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: Residential, Vacation Rental, Commercial, Industrial, Agriculture, Conservation, Hotel/Resort, Residential Investor, Commercialized Home Use and Homestead. Vacant Land is assigned a tax rate based upon the underlying zoning, untiil such time as a use is established.
- The Homestead class is made of properties which are used exclusively as the owner’s principle residence, no matter what the zoning is. The Homestead Class is also awarded to 'primary residence' properties where all additionnal 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 Homestead Class. The 'Commercialized Home Use' tax class is awarded to properties that have a 'primary residence' with qualified Home exemption yet have additonal 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.
The tax year begins on July 1 and extends until the following June 30. These are the important dates to remember:
||Deadline for filing exemption claims and recordation of ownership documents
||Assessment set for use during next tax year
||Assessment notices mailed
||Deadline for assessment appeals
||Second half year tax bills mailed
||Second half tax year payment is due
||Certified assessment roll to County Council
||Tax Rate set by County Council
||Tax Year Commences
Deadline for filing dedication petitions
||First half year tax bills mailed
||First half tax payments due
TAX MAP KEY IS IMPORTANT
- Homeowners should know their Tax Map Key (TMK) number, also know as Parcel ID, PARID or PID. Real property is mapped and indexed numerically according to a tax key system which identifies your property. All matters concerning your property should be made in reference to the Tax Map Key.