How Does A Home Exemption Reduce Your Property Tax?

The home exemption for Oahu residents assists property owners by reducing the amount of property tax they pay on their principal residence. The first home exemption law was enacted way back in 1896 by the Republic of Hawaii to provide some tax relief and to encourage settlement. In this year, the home exemption amount was $300. Currently, the basic home exemption is $80,000.

How a home exemption works is the $80,000 is deducted from the assessed value of the property and the homeowner is then taxed on the difference. This results in a lower amount of property tax owed. The assessed value of a property is determined by the Real Property Assessment Division of the City and is provided to the owner each year. This assessed value may change over time as property values change. If you have an exiting exemption on your primary residence this will be reflected on your tax assessment statement.

There are other real property tax exemptions based on your age or life situation. Your exemption amount increases from $80,000 to $120,000 when you reach the age of 65. There may also be other exemptions if you are a disabled veteran, or are afflicted by a disability or hansen’s disease.

So just how do you qualify for a home exemption? Here are specific steps to qualifying for a home exemption as provided by the City and County of Honolulu

    1. You own and occupy the property as your principal home (“real property owned and occupied as The owner’s principal home” means occupancy of a home in the city with the intent to reside in the city. Intent to reside in the city may be evidenced by, but not limited to, the following indicia: occupancy of a home in the city for more than 270 calendar days of a calendar year; registering to vote in the city; being stationed in the city under military orders of the United States; and filing of an income tax return as a resident of the State of Hawaii, with a reported address in the city.
    2. Your ownership is recorded at the Bureau of Conveyances, State Department of Land and Natural Resources, in Honolulu on or before September 30 preceding the tax year for which you claim the exemption. In the case of a lease, the document must indicate that the lessee has a lease for residential purposes for a term of five years or more and will pay all property taxes.
    3. You file a claim for home exemption (Form P-3) with the Real Property Assessment Division on or before September 30 preceding the tax year for which you claim the exemption.

Special Circumstances

Only one home exemption is allowed therefore if you are a married couple living in separate residences then (1/2) of the exemption is applied to each residence.

If you are a totally disabled veteran with injuries sustained while you were serving in the U.S. Armed Forces you may be entitled to a complete exemption from real property tax. You will need to file form BFS-RP-P-6B and have a physician’s note filed before June 30th for the first payment or by December 31 for the second tax payment of the fiscal year. This exemption will remain in effect so long as the veteran is alive or so long as the widowed spouse remains unmarried.

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About the Author

Brandon Lau grew up in Kailua and currently resides in Honolulu with his wife Andee and children Caylah, Elijah, and David. His eighteen years in real estate led him to become a Partner at ChaneyBrooks Choice Advisors. Over the past 10 years he has developed the team and systems that has created a high level of service and value for his clients.

What differentiates Brandon and his team is his consultative approach to real estate. He advises clients with relevant data and expert insight to help them make the best choices in real estate. Good choices in planning for long term dispositions, negotiating for the best price or knowing when not to pursue an investment are ways his consultative services will give you an advantage in the marketplace. His bottom line is providing service with the utmost integrity and expertise.