Understanding Property Taxes on Oahu for 2024 - 2025

One of the more important factors you need to understand when buying a home in Hawaii is the property tax structure. It may be different from what you are used to, so we have outlined what you need to know below. There are eleven primary classes of real estate tax on Oahu, with certain classes being divided into tiers based on the property's valuation. These classes are: Residential, Hotel & Resort, Commercial, Industrial, Agricultural, Preservation, Public Service, Vacant Agricultural, Residential A (tiered), Bed & Breakfast Home, and Transient Vacation (tiered).

Property taxes in Hawaii go into effect on July 1st, with the fiscal year running to June 30th of the following year. 2024 brings with it some changes to the tax structure, with Transient Vacation units in their own tiered class. The rest of the real estate property tax rates were largely unchanged compared to last year.

Put simply, Honolulu property taxes are calculated by finding the assessed value of a property and dividing it by tax rate of the relevant class and tier. The assessed value is determined by the city assessor, who looks at both the market value of the home and any significant improvements made to it, a process that takes place every year. It is common to see an assessed value that is lower than the market value of your home, but that works in your favor for a lower tax bill.

Residential Tax Rates in Oahu

Residential real estate in Oahu is divided into two classes for property tax purposes:

  • Owner occupied - Residential
  • Non-owner occupied - Residential A

If a property is your primary residence, meaning you live there for at least 270 days of the year, the tax rate is 0.35% regardless of the value. This is true for single-family homes or multi-family homes with 4 or fewer units.

2023 - 2024 Property Tax Rates on Oahu

Non-owner-occupied property, meaning real estate that you do not reside in for at least 270 days out of the year, is taxed differently. The tax rate up to $1,000,000 is 0.40%, but anything above $1,000,000 is taxed at a 1.14% rate.

The way this plays out might look like this:

Let's say you own a property that is worth $1,500,000. You do not live in the property as your primary residence, so it is taxed under both Tier 1 and Tier 2 of the Residential A Tax Rate. This means the first $1,000,000 is taxed at a rate of 0.40% ($4,000) and then the $500,000 above that is taxed at a rate of 1.14% ($5,700). This would make your total tax bill for the year $9,700.

What You Need to Know about the Homeowners Tax Exemption

If the home you own on Oahu is your primary residence, you can claim the Homeowners Tax Exemption. In order to qualify, you need to fill out this form and submit it to the real property assessment division (RPAS) to prove that you are living there, verified by showing that you are registered to vote in Honolulu, file an income tax return as a State of Hawaii resident, or occupy the home 270 days or more each calendar year.

Graphic detailing Oahu Homeowner property tax exemptions

If you qualify, the homeowner's tax exemption allows you to claim the 0.35% property tax rate no matter the value of the property, in addition to an exemption amount of $120,000 for those under 65 years old and $160,000 for those 65 years old and older.

For example, if you are 40 years old and live in a home that is worth $1,200,000, you can claim the exemption and only be taxed on $1,080,000 at the 0.35% rate.  For that same property if you are 65 years old then you would be taxed on $1,040,000 at the 0.35% rate.

Property Tax Overview For Oahu

2024 - 2025 Oahu Property Tax Rates

In addition to the residential tax rates, there are unique rates and details to keep in mind for other types of real estate in Oahu, including commercial, industrial, agricultural, vacant agricultural, public service, preservation land, bed & breakfasts, and hotel & resort. These detailed distinctions are aimed at appropriately taxing different industries and scenarios to support the needs of the island in an equitable way.

The latest addition to the property tax classes is the Transient Vacation class. It applies to properties used as short-term vacation rentals, and is currently divided into two tiers based on the property's assessed value:

  • Tier 1: Applies to properties with a net taxable value up to $800,000, with a tax rate of $9.00 per $1,000 assessed value
  • Tier 2: Applies to properties with a net taxable value exceeding $800,000 with a tax rate of $11.50 per $1,000 assessed value

Under the current version of the tax bill, here's an example for a transient vacation property that is worth $1,500,000. It is above $800,000, so it is taxed under both Tier 1 and Tier 2 of the Transient Vacation Tax Rate. This means the first $800,000 is taxed at a rate of $9 per $1,000 ($7,200) and then the $700,000 above that is taxed at a rate of $11.50 per $1,000 ($8,050). This would make the total tax bill for this transient Vacation property around $15,250.

Additional Insights into Oahu Property Taxes

Oahu property taxes are paid in two annual equal installments during the fiscal year, which runs from July 1 to June 30. The first installment is paid on August 20, and the second on February 20 (unless one of these dates falls on a holiday, in which case it is due the next business day). Payments can be made online, over the phone, in person, or through the mail.

As property tax rates and other details change, it becomes even more valuable to have a local expert you can rely on. I would love to help you navigate the Oahu real estate market to find a home you love or reach your investing goals this year. Contact us any time to learn more.

 

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