Maui Property Taxes Fiscal Year July 1, 2023-June 30, 2024 Rates

cb@luxuryrealestatemaui.com (Courtney M. Brown) — Thu, 18 May 2023 10:32:00 -1000

Maui Property Taxes Fiscal Year July 1, 2023-June 30, 2024Changes: Classifications & Rates Each year, Maui County does two things: assesses the value of the property AND sets new rates for the upcoming fiscal year, which runs from July 1st-June 30th. Below is a snapshot of the new Maui County Property Tax Rates for 2023-2024 as well as a summary of how they've changed over the years. How do you calculate your property taxes given the new tiered system? Fidelity National Title put together this helpful video when the new tiered system was introduced in 2020. Note the tier amounts have changed in 2022 from prior years. Maui County Property Tax Rates 2023 vs Prior Years Rates are per $1000 of assessed value. In 2020, the County introduced a new Tiered assessment. Prior to that, there was a flat rate per the classification. Classification 2023 2022 2021 2020 2019 2018 2017 2016 2015 Owner Occupied $1.90-2.75 $2.00-2.71 $2.41-2.71 $2.51-2.61 $2.90 $2.85 $2.86 $2.70 $2.78 Tier 1 <$1,000,000 $1.90 $2.00 $2.41 $2.51 NA NA NA NA NA Tier 2 $1,000,001-$3,000,000 $2.00 $2.10 $2.51 $2.56 NA NA NA NA NA Tier 3 $3,000,001> $2.75 $2.71 $2.71 $2.61 NA NA NA NA NA Residential $5.85-12.50 $5.85-12.50 $5.45-8.00 $5.45-6.90 $5.60 $5.52 $5.54 $5.30 $5.40 Tier 1 <$1,000,000 $5.85 $5.85 $5.45 $5.45 NA NA NA NA NA Tier 2 $1,000,001-$4,500,000 $8.00 $8.00 $6.05 $6.05 NA NA NA NA NA Tier 3 $4,500,001> $12.50 $12.50 $8.00 $6.90 NA NA NA NA NA Commercialized Residential $4.40 $4.40 $4.40 $4.40 $4.60 $4.55 $4.56 $4.35 $4.35 Long Term Rental $3.00-8.00 $3.00-8.00 NA NA NA NA NA NA NA Tier 1 <$1,000,000 $3.00 $3.00 NA NA NA NA NA NA NA Tier 2 $1,000,001-$3,000,000 $5.00 $5.00 NA NA NA NA NA NA NA Tier 3 $3,000,001> $8.00 $8.00 NA NA NA NA NA NA NA Apartment $3.50 $3.50 $5.55 $5.55 $6.31 $6.31 $6.32 $6.00 $6.00 Short Term Rental $11.85 $11.85 $11.11-11.20 $11.08 $10.75 $9.28 NA NA NA Tier 1 <$1,000,000 $11.85 $11.85 $11.11 $11.08 NA NA NA NA NA Tier 2 $1,000,001-$3,000,000 $11.85 $11.85 $11.15 $11.08 NA NA NA NA NA Tier 3 $3,000,001> $11.85 $11.85 $11.20 $11.08 NA NA NA NA NA Commercial (all three tiers) $6.05 $6.05 $6.29 $6.29 $7.39 $7.25 $7.28 $6.60 $6.60 Agricultural $5.74 $5.74 $5.94 $5.94 $5.94 $6.00 $6.01 $5.80 $5.90 Conservation $6.43 $6.43 $6.43 $6.43 $6.43 $6.35 $6.37 $5.80 $5.90 Industrial $7.05 $7.05 $7.20 $7.20 $7.48 $7.45 $7.49 $6.69 $6.85 Hotel & Resort $11.75 $11.75 $11.75 $10.70 $11.00 $9.37 $9.37 $8.71 $8.85 Timeshare $14.60 $14.60 $14.60 $14.40 $14.40 $15.41 $15.43 $14.31 $14.55 Maui Property Taxes: how have they changed? 2024 vs. 2023 Owner Occupied/Homeowner. The rates went down for Tiers 1 & 2, and held steady at Tier 3. Tier 1 (-5 vs. -17 las year), Tier 2 (-4.67), Tier 3 (+1.48) No other significant changes Looking back over the past 5 years, the county has decreased the property tax rates for homeowners and apartment owners and kept it fairly steady in others like Agricultural and Conservation zoning. The largest increases have been to Short Term Rentals, Hotels & Resorts, and second homeowners. The County of Maui has been under pressure to keep housing affordable for local homeowners and residents and to provide affordable housing. To incentivize owners to rent long-term (12-month leases or longer), they've introduced a lower property tax rate and an exemption (see Bill 129 below). Per the Maui County property tax website: "Property is classified based upon its highest and best use. Properties receiving home exemptions, long-term rental exemptions, permitted bed and breakfasts and permitted transient vacation rentals are exceptions." What do Maui County Classifications mean? Per the Maui County website*, the County of Maui details the classifications of real property as follows: Time Share – real property that is subject to a time share plan as defined in section 514E-1, Hawaii Revised Statutes. Non-owner-occupied - real property improved with a dwelling, as defined in the comprehensive zoning ordinance, that would not be classified as “owner-occupied”, “hotel and resort”, “time share”, “short-term rental”, “commercial”, “industrial” or “commercialized residential”. Commercialized Residential – real property that serves as the owner’s principal residence and has been granted bed and breakfast home permit, a short-term rental home permit, or a conditional permit allowing a transient vacation rental use. Short Term Rental – lodging or dwelling units occupied by transient tenants for periods of less than six consecutive months, including real property that does not serve as the owner’s principal residence and has been granted a short-term rental home permit or a conditional permit allowing transient vacation rental use without regard to its highest and best use and cannot qualify for a home exemption. Apartment – multi-dwelling-unit improvements containing five or more dwellings that would not be classified “short-term rental”. Commercial Industrial Agricultural Conservation Hotel and Resort – properties occupied by transient tenants for period of less than six consecutive months, have eight or more lodging or dwelling units and employ more than twenty full time persons. Owner-occupied – properties owned and occupied as a principal home and for which a home exemption was filed and granted. NEW Long-term rental – lodging or dwelling units as defined in the comprehensive zoning ordinance occupied by long-term tenants for periods of twelve consecutive months or more to the same tenant and have been granted a long-term rental exemption. Note: No definition was provided for Commercial, Industrial, Agricultural or Conservation. *This information taken from https://www.mauicounty.gov/755/Classification-for-Tax-Rate-Purposes as of the date of this post. It is subject to change. Important Dates July 1—Tax year commences. Taxes are calculated based upon January 1 assessed values and fiscal year tax rates. July 20 — First half of fiscal year tax bills mailed. August 20 — First half of fiscal year tax payments due. September 1 — Deadline for filing dedication petitions. December 1 — Condominium AOAO use declaration. December 31 — Deadline for filing circuit breaker applications for the next fiscal year. December 31 — Deadline for filing exemption claims and ownership documents. January 1 — Assessed values established for use during the next tax year. January 20 — Second half of fiscal year tax bills mailed. February 20 — Second half of fiscal year tax bills due. March 15 — Assessment notices mailed. April 9 — Deadline for filing appeals. May 1 — Certified assessments forwarded to the County Council for budget purposes. June 20 — Tax rates established by the County Council For additional information, all dates to remember, and appeals information visit the Maui County website Maui Property Tax: What Changed in 2022? In December 2020, the County Council unanimously passed Bill 129. In an effort to bolster housing for local residents, the county passed Bill 129 which creates an additional tax advantage to someone choosing to rent their property on a long-term basis. This bill essentially creates a "long-term rental" tax classification and exemption. This took effect on January 1, 2022. The long-term-rental exemption form is available with other forms at: https://www.mauicounty.gov/1953/RPA-Forms-andInstructions. The deadline to file for the long-term rental exemption for the next fiscal year is December 31, 2022 What could change in 2023? Update August 16, 2022 In July, the County Council met and passed the FIRST READING of Bill 93 (2022) to amend Sections 3.48.450 and 3.48.466, Maui County Code, to increase the homeowner exemptions for a principal home to $300,000, and amends the long-term rental exemptions, beginning January 1, 2023. Note: Information pulled from multiple county sources (MauiPropertyTax.com, Mauicounty.gov and the Municipal Code as of the date of this post. However, it is subject to change as these websites are updated. Please check with the County of Maui's real property tax division with any questions or to verify what rate applies to your property. This post is informational in purpose and does not constitute legal or tax advice.

Vacation Homes & 1031 Exchanges

cb@luxuryrealestatemaui.com (Courtney M. Brown) — Tue, 09 May 2023 23:16:00 -1000

FAQ: Vacation Homes & 1031 Exchanges 1031 exchanges are common here on Maui, where many properties are second homes. The following is a summary of the guidelines for Exchanging a Vacation Home as part of a 1031 tax deferred exchange. The information outlined below is courtesy of Julie Bratton, of Old Republic Exchange Company. IRS Guidance on Exchanging Vacation Homes:Revenue Procedure 2008-16 Provides Safe Harbor Revenue Procedure (“Rev. Proc.”) 2008-16 provides a safe harbor for exchanges of vacation homes (defined as “dwelling unit” in the Rev. Proc.). This ruling provides clear guidance of the circumstances under which the IRS will not challenge whether a vacation home will qualify as property “held for investment” under §1031. Vacation Home as Relinquished Property For a vacation home to qualify as relinquished property, it must meet the following criteria: • It is owned by the taxpayer for at least 24 months immediately before the exchange (“qualifying use period”); and • Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit at fair rental to an other person for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental value. The first 12 month period immediately preceding the exchange ends on the day before the exchange takes place (and begins 12 months prior to that day). The second 12 month period ends on the day before the first 12 month period begins (and begins 12 months prior to that day). Vacation Home as Replacement Property For a vacation home to qualify as replacement property, it must meet the following criteria: • It is owned by the taxpayer for at least 24 months immediately following the exchange (“qualifying use period”); and • Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit to another person at fair rental for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental. The 12 month period immediately after the exchange begins on the day after the exchange takes place and the second 12 month period begins on the day after the first 12 month period ends. Personal use is defined broadly. Use by the taxpayer or other person having an interest in the dwelling unit and any family member* will be considered “personal use” by the taxpayer. Also, any arrangement whereby fair market rent is not paid will be considered “personal use” by the taxpayer. Notwithstanding the foregoing, use by family members will not be considered “personal use” by the taxpayer only if the dwelling unit is rented at fair market rent and the family member uses it as his principal residence. Fair rental is based upon all of the facts and circumstances that exist when the rental agreement is entered into. All rights and obligations of the rental agreement are taken into account. Note special rule for replacement property. If the taxpayer files a return reporting a transaction under §1031 based on the expectation that the dwelling unit will meet the qualifying use standards and subsequently determines that the dwelling unit does not meet the qualifying use standards, the taxpayer, if necessary, should file an amended return. Exchanges of vacation homes outside the Rev. Proc. 2008-16 safe harbor. An exchange of a vacation home may still qualify under §1031even though it falls outside the parameters of Rev. Proc. 2008-16. Any such circumstance will be subject to greater scrutiny and therefore should be carefully planned and reviewed by the taxpayer’s tax advisor. *Brothers and sisters (by the whole or half blood), spouses, ancestors, and lineal descendants. Information is subject to change. Interested parties should contact their tax professional. Additional information can be obtained by contacting Julie Bratton Vice President | Old Republic Exchange CompanyD: 808.524.6737 OR 415.515.7017 for San Francisco & Northern CAT: 877.591.1031 | F: 866.250.8530 I Shortel: 45742JBratton@OldRepublicExchange.comOld Republic Exchange Facilitatorwww.OldRepublicExchange.com

Maui Real Estate & Lifestyle News

Maui Property Taxes Fiscal Year July 1, 2023-June 30, 2024 Rates

Vacation Homes & 1031 Exchanges