Proposed tax change on Hawaii island could hurt older homebuyers

The following testimony was submitted Feb. 21, 2023, by the Grassroot Institute of Hawaii to the Hawaii County Committee on Finance.

February 21, 2023
11 a.m.
Hawaii County Building

To: Committee on Finance
      Councilmember Matt Kaneali’i-Kleinfelder, Chair
      Councilmember Cindy Evans, Vice Chair

From: Grassroot Institute of Hawaii
           Jonathan Helton, Policy Researcher


Comments Only

Dear Chair and Committee Members:

The Grassroot Institute of Hawaii would like to offer its comments on Bill 23, which would amend eligibility requirements for the additional homeowners exemption for individuals who are 60 years of age or older.

In particular, this bill would require that any property owner 60 years of age or older must have received the standard homeowner exemption for five of the last 10 years to be eligible for the additional homeowner exemption, which allows qualified homeowners to deduct $85,000 or more from the value of their home for property tax purposes.

Bill 23 would also clarify that this exemption runs with the property owner, not the land, so homeowners who move would still be able to keep the exemption if they sold their house and purchased a new one.

Whatever the intentions of this measure may be, we are concerned that it might adversely affect new homeowners who are more than 60 years of age.

Any local family who rents for most of their life, saves money for a home and purchases it during retirement would not realize the benefits of the additional homeowner exemption. In such a situation, there would be no way for the new homeowners to receive this exemption since they could not have received the standard exemption prior to owning a home.

Further, this bill may also make it harder for residents aged 60 or older from other islands to buy a home in Hawaii County by effectively excluding them from the additional homeowners exemption.

We applaud the bill for clarifying that the additional homeowners exemption should run with the owner. However, we would encourage the committee to consider the negative effects this measure could have as currently written.

As we explain in a forthcoming report on property tax relief, Hawaii’s counties have ample room to reform their property taxes to provide assistance to struggling homeowners, renters and businesses — while at the same time retaining the tax as a crucial revenue tool.

With property values — and therefore tax assessments — generally increasing, such relief is much needed. Combined with inflation, our cost of living and high energy prices, soaring housing costs are just one more reason for Hawaii residents to leave for good, which is why the council should prioritize property tax reform in the coming months.

Thank you for the opportunity to testify.


Jonathan Helton
Policy Researcher
Grassroot Institute of Hawaii

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