Hawaii has one of the lowest property tax rates in the nation, which is great news for homeowners. However, the property tax system on Oahu has some unique features that every buyer and homeowner should understand to avoid surprises and maximize available exemptions.

Property taxes on Oahu are administered by the City and County of Honolulu. The tax rate you pay depends on how your property is classified. Residential properties occupied by the owner as their primary residence receive the lowest tax rate. Investment properties, vacation rentals, and commercial properties are taxed at higher rates.

The homeowner exemption is one of the most valuable tax benefits available to Oahu residents. If you occupy your property as your primary residence, you can apply for a home exemption that reduces your assessed value. This exemption must be applied for and is not automatic when you purchase a home. Make sure to file your home exemption application with the City and County of Honolulu as soon as you close on your new home.

Property assessments on Oahu are based on the fair market value of your property as determined by the Real Property Assessment Division. Assessments are updated annually, and your tax bill reflects the assessed value as of October first of the prior year. If you believe your assessment is too high, you have the right to appeal.

Tax rates on Oahu are set per thousand dollars of assessed value and vary by property classification. The rates are adjusted periodically by the City Council. Owner-occupied residential properties enjoy the lowest rate, while hotel and resort properties pay the highest rate.

For buyers, understanding property taxes helps you calculate your true monthly housing cost. Your lender will typically collect property taxes as part of your monthly mortgage payment through an escrow account. Be sure to factor in the correct tax rate based on how you plan to use the property.

Kristy and Austin Home Group helps buyers understand the complete cost of homeownership on Oahu, including property taxes, exemptions, and strategies to minimize your tax burden. Contact us for personalized guidance on any property you are considering.