[youtube_video] ZqBEyKo7Sw0 [/youtube_video] The video does not reflect the latest updates which are outlined below.
If you live in your home or condo as your primary residence in Honolulu County, which is the island of Oahu, you need to claim your Home Exemption. This tax break will save you thousands of dollars in property taxes.
You need to file by September 30, the annual filing due date. Your tax break will take effect next fiscal year, starting July 1st after the Sept filing deadline.
1.) Are you eligible?
You must own and occupy your Honolulu property, with the intent to live in it as your primary residence. You can only have one primary residence.
Proof that this is your primary residence could include:
· Evidence you live at this address for 270 calendar days per year.
· Subject address shows on your voter registration.
· Subject address shows on your State or Federal income tax return.
Also, you need to be at least 18 years of age and be a legal resident in Honolulu County.
2.) How much can you save:
The home exemption amount you may claim depends on your age by June 30th prior to the September 30th filing deadline and will take effect July 1st the following year.
Update: The brackets are now staggered as follows:
- $100,000, if you are below age 65. – This is the standard home exemption amount.
- $140,000, if you are age 65 and above.
Other home exemption age brackets previously available have been eliminated.
- Spouses owning separate homes and living apart shall be entitled each to one-half (1/2) of one exemption.
- A separate exemption claim should be submitted for each owner occupant.
The home exemption amount will be deducted from the assessed value. You will only be taxed on the net assessed value. (Assessed value – home exemption = net assessed value)
Example: Let’s say your primary residence is assessed at $900,000. You are 65 years by June 30th this year and you file on time by Sept 30 this year. Effective July 1st next year you will only be taxed on $760,000 net assessed value ($900K – $140K = $760K). At the $3.50 rate per $1,000 assessed value, this will save you $490 per year compared with having no home exemption.
But the real big savings are realized when either:
- your property is assessed at $1Mill or above, or
- the property is zoned ‘Hotel & Resort’, e.g., a condotel
Because in Honolulu County there are three relevant property tax rates that come into play:
· Residential: $ 3.50 per $1,000 assessed value – Regular residential property tax rate for homes and condos. That is about the cheapest residential property tax rate anywhere in the whole nation.
· Residential Rate ‘A’ (applies to residential properties assessed at $1Mill and above, without home exemption): UPDATE: new tax rate as of 7.1.2019:
$4.50 per $1,000 (0.45%) of the net taxable value for Oahu homes and condos assessed up to $1Mill that have not filed for the home exemption.
$10.50 per $1,000 (1.05%) of the net taxable value for Oahu homes and condos assessed above $1Mill that have not filed for the home exemption.
· Hotel and Resort: $ 13.90 per $1,000 assessed value – If your property is a resort zoned property, e.g. a condotel like Trump Tower, Ritz Carlton, Ilikai, or others. (Tax rate is almost 4 times the regular rate) unless you apply for the dedication for residential use.
Filing the home exemption will not only get you the $100K or $140K exemption amount, but also it will drop your tax rate on the net assessed value to the lower $3.50 per $1,000 assessed Residential rate!
Example luxury condotel: Let’s say you are 65 years old by June 30th this year and you bought a nice luxury condotel at the Trump Tower, assessed at $2Mill and you live in it as your principal residence, and you file by 9/30 this year. Effective 7/1 next year, besides the $490 savings per year for a $140K reduction in assessed value, you will drop your tax rate from $13.90 per assessed $1,000 to the lower $3,50 rate per $1,000 assessed. Here is a calculation without vs with home exemption:
- a.) $2Mill gross assessed x ($13.90/$1,000) = $ 27,800 tax without home exemption
- b.) $2Mill – $140K home exemption = $1.86Mill net assessed value x ($3.50/$1,000) = $6,510 tax with home exemption. —> Savings: $21,290 per year.
You see how the savings can be huge if you qualify for the home exemption, but you must file by the deadline.
UPDATE: As of July 2017, to claim the lower $3.50 residential tax rate for your condotel you will need to also file the dedication for residential use.
3.) How do you file?
UPDATE: You may now file directly online.
Or, click here to download form P-3. Make sure to file by the 9/30 deadline!
Complete the Parcel ID number on the top left corner in the 12-digit format, which means you skip the first digit #1 (#1 represents Oahu), and you include all zeros. If you count the digits from the back with all zeros and you skip the #1 first digit you should have 12 digits. Add “-HEX” at the end (for Home Exemption).
Complete your name, social security number, and birthday. Remember you are entitled to a larger home exemption than the standard $100K if you are age 65 or above. That’s why you will need to attach proof of age, such as a copy of your picture ID.
Fill in the property address and complete the rest of the form, including: I’m a legal resident of “USA, Hawaii, Honolulu County”
Do you have a home exemption anywhere else? Yes / No. Remember you can only have one primary residence and therefore you can only claim one home exemption.
Include a photocopy of the form and a self-addressed stamped envelope to get a stamped receipt. Make another photocopy for yourself so you know what you mailed in. Instructions are on the back of the form including the address where to mail it.
That is our tip of the day.
We love to hear from you. Please let us know what you think. Click Like, Share or Comment below.
~Aloha
is my spouse living in the same home entitled to the standard $100K?
I am already exempt $100K
Aloha Monica!
The standard exemption is limited to $100K regardless of how many owners reside in the house.
However, your spouse (and or any additional owners residing in the house), should file their own separate application as follows:
D. How many owners live in this unit? –> “Two” owners.
H. Do you live separately from your spouse? –> “No”
Make sure each owner submits proof of age as required.
Good luck.
~ Mahalo & Aloha
Hi. Thanks for the info! When filing online, a signature is not required?
Aloha Craig!
No wet signature is required when filing online.
You upload a copy of your government-issued picture ID.
At the final step of the application, you simply ‘click’ a button to certify that you are the property owner and that your application info is accurate.
Good luck.
~ Mahalo & Aloha
Thank you for this information. If the spouse living in the same home that is 65+ passes away and the surviving spouse is younger than 65 is the exemption taken away until the surviving spouse turns 65?
Aloha Kyle!
The surviving spouse living in the same home is entitled to the standard $100K exemption until reaching the age of 65.
At age 65, the surviving spouse is entitled to the larger $140K exemption.
You save an additional $140/year with a $140K exemption over the regular $100K exemption ($40K x $3.50/1000 = $140/y).
How and when will the tax office find out that the 65+ spouse had passed away?
With all tax matters always check with your favorite qualified tax professional.
~Mahalo & Aloha
Aloha George,
If the property is classified as Hotel/Resort but is being used for residential purposes, a Residential Use Dedication should also be filed by the September 1st deadline. Simply having a claim for home exemption will not change the property class. Please visit http://www.realpropertyhonolulu.com for exemption and dedication information and forms.
Aloha FKL!
Thank you for your contribution to keeping this info up to date.
You are making an excellent point.
The article was from 2016 and we did update it in July 2017, see noted in Red, middle of the page.
Let us know if there are any other concerns that need to be addressed.
We appreciate your support and are here to help.
~ Mahalo & Aloha
My age is 80+ and my wife (living the same home) is only 78+ then should both of us fill out and submit application form separately? Or, only the 80+ one to fill exemption for 80+ will do? The exemption will be based on 80+ or 75+?
Aloha George!
Currently, there are only ‘two’ home exemption age brackets remaining:
$100K exemption if you are below age 65.
$140K exemption if you are age 65 and above.
The city eliminated additional age brackets several years ago.
— You and your wife each file your own form as follows:
D. How many owners live in this unit? –> “Two” owners.
H. Do you live separately from your spouse? –> “No”
Make sure each of you submits proof of age as required.
That gives you the maximum $140K exemption currently available.
File by the Sept 30th filing deadline.
With any tax issues, always verify with your favorite qualified tax professional.
Good luck.
~Mahalo & Aloha
My mother died and property exemption ended and I was not prepared. Now I can’t afford my taxes because I lost her exemption. I really don’t know what to do
Aloha Suzanne!
I’m very sorry to hear that.
If you are on the title then you can claim the home exemption in your name provided you live in the property as your primary residence.
Or you could sell the property and cash out with little capital gains tax consequence due to the stepped-up basis from the time of your mother’s passing.
Always check with your favorite qualified tax professional.
Call us if you need help selling your property. That’s where we excel.
We are here to help. ~ Mahalo & Aloha
You said that only one home can be listed as Primary Residence. Does not mean in Hawaii? Or include 2nd home in other States, like California.
Aloha Jin Hahn!
In this universe, you can only own ‘one’ primary residence at a time.
That’s where you live most of the time.
Mahalo & Aloha
How can I get the form?I just converted from lease to fee. Do I need to file a new form? They used to mmake the change on age bracket automatically If they don’t I want a form to do so. Thanks. albert fu 946 9705.
Aloha Albert!
As provided in the article, you may file on line here:
https://app.realpropertyhonolulu.com/Exempt/Identify
Or, you may download the form here:
https://www.realpropertyhonolulu.com/media/1398/bfsrpp3.pdf
Let us if you need help with buying or selling real estate. That’s where we truly excell! Stay safe. ~ Mahalo & Aloha
Moved to Hawaii in July of this year, I submitted the form to qualify for $120,000 exeption prior to the September deathline , not knowing that it had three age teers, I did enter current age on form I am currently 77 years old, can I still get $140,000 vise $120,000. If you enter your current age on form, should it be automaticaly honored for the appropiate teer.
Please let me know if I have re-course
Mahalo
Aloha Benjamin Ruelas! If you filed a) by 9/30/2019, and b) attached the appropriate proof of your age 77 (copy of picture ID), then the $140K home exemption should automatically be effective 7/1/2020, the start of the new 2020 fiscal year.
– Let us know if there is anything else we can do for you. We are here to help.
~ Mahalo & Aloha
What proof is required for the 270 days of the year? Many thanks K
Aloha Kathy Osgood! Thank you for checking in. Proof that you live at the address most of the year or at least 270 calendar days per year could include:
a) Your bills go to the subject address.
b) The subject address shows on your voter registration.
c) The subject address shows on your State or Federal income tax return.
– Let us know if there is anything else we can do for you. We are here to help.
~ Mahalo & Aloha
Aloha, can you still get the exemption if you rent out part of your house?
If so how much square footage percentage can you rent out?
Aloha Lisa Bennett Fillmore!
Mahalo for asking.
The J-3 home exemption application form requires you to indicate the building area (square feet) used for rental or business purposes.
You are entitled to an exemption ‘only for the portion of the property which is exclusively occupied as your principal home.’
For the full explanation and exceptions check here: https://www.honolulu.gov/rep/site/ocs/roh/ROH_Chapter_8a_10.pdf
Let us know if you need anything else. We are here to help.
~ Mahalo & Aloha
Can u get this even is u have another property say on maui.. but u dont live there
Aloha Yvonne Macy!
Thanks for asking.
You may claim your home exemption only for one property, your primary residence. It does not matter how many 2nd homes, vacation homes, or investment rental properties you own in Hawaii or anywhere else.
Let us know if you need anything else. We are here to help.
~Mahalo & Aloha
Has this home exemption changed since the new Trump tax plan was rolled out?
Aloha Risa! Thank you for checking in.
The home exemption is a Hawaii state specific, local tax break for owner occupants. It remains unaffected.
More about Honolulu property taxes here: https://www.hawaiiliving.com/blog/property-taxes-in-honolulu-county-oahu-explained/
The new Trump ‘Tax Cuts and Jobs Act 2018′ is a federal tax reform. How the new federal tax reform applies to real estate here: https://www.hawaiiliving.com/blog/real-estate-tax-benefits/
– Let us know if there is anything else we can do for you. We are here to help. ~Mahalo & Aloha
George Krischke, Principal Broker, Hawaii Living LLC – Mahalo for your response and the links!
wonderful, especailly for older people.
Mahalo & Aloha
Thanks for the info
Aloha Robert. You are welcome. Let us know if there is anything else we can do for you. ~Mahalo & Aloha