Real Property Taxes-How do they come up with that number?!


There are many methods of determining real property taxes with the most commonly accepted one being the ad valorem (according to value) tax system.  After the determination of an overall state budget, each county can accurately determine the amount of tax revenue it must derive from the levy of real property taxes.  Obviously this amount of tax revenue is dependent on many things, including both the amount of land and the use of the land.  A tax structure must be established which will equitably produce the amount of revenue required from real propperty tax.  Once levied against real property, taxes become a lien, and may be enforced by the sale of some or all of the property.  In Hawaii, legislation determines the method to be utilized by the city or county council of each of the four counties for determining the tax rates applies to each class of property .  Responsibility for annual evaluation and tax assessment of all such property lies with the individual counties.  Currently following an evaluation (appraisal) the property is assessed at 100 percent of it fair market value.  Annual real property taxes are then computed at so many dollars per thousand dollars of assessed valuation.   This tax rate is determined by each county and is naturally dependent upon the classification of property being taxed, which may include agricultural, apartment, business, industrial, residential and resort.

Taxes are assessed on a calendar year but are collected in two installments during the fiscal year that run from July 1 to June 30.  The first installment covers the taxes due form July 1 to December 31 (payable August 20th) and the second installment covers the amount due for January 1 through June 30 (payable February 20th)  Of the same tax year.  Taxes become delinquent if not paid by each of the installment due dates,  If delinquent after thew years, the county can enforce a sale by public auction.

If a landowner feels that he has been charged too much for taxes on his property, he may appeal the assessed valuation.  Notice of the appeal must be lodged with the assessor on or before April 25th of the tax year,with the Real property Assessment Division.  This valuation may be too high due to an honest mistake by a county appraiser, or the county may actually be in disagreement with the land owner as to true value.  If the taxpayer’s protest is based on sound figures derived from a thorough comparable analysis of his property he has a good chance of obtaining a reduction.  In the event the landowner is unable to secure a reduction, he then has the right to appeal his case to the courts.  However, it should be pointed out that pending the outcome of an appeal, all taxes on the property must be paid and failure to do so would result in assessing of penalties due to the delinquent taxes.

If you are a property owner who would like to appeal the assessment, please go to the County of Hawaii Weblink here.

Here is a chart that gives the breakdown as to how taxes are figured based upon the classification of property being taxed as well as the type of ownership.


 Fiscal Year Beginning July 1, 2012 to June 30, 2013
  Tax Rate Per Tax Rate Per  
  $1,000 Net $1,000 Net  
  Taxable Building Taxable Land  
0 Affordable Rental Housing  $5.55  $5.55  
1 Residential  $9.10  $9.10  
2 Apartment  $9.85  $9.85  
3 Commercial  $9.10  $9.10  
4 Industrial  $9.10  $9.10  
5 Agricultural and Native Forest  $8.35  $8.35  
6 Conservation  $9.85  $9.85  
7 Hotel/Resort  $9.85  $9.85  
9 Homeowner  $5.55  $5.55  
Chapter 19, Article 11, Section 19-90 of the Hawaii County Code provides that the tax rates  
be set on or before June 20 preceding the tax year for which property tax revenues are to be raised.