Maui Interior Design Resource Guide

The 5 Most Asked Questions on Buying MAUI Homes and Condos

The 5 Most Asked Questions on buying Maui, Hawaii Homes and Condos

Above is a Maui Surf Video by one of my sons last week on as he and his friends did “dawn patrol”.  Feels like you are riding the wave yourself.  Hope you enjoy!

1) What is the best area of Maui to buy? 

Well, that seems like an easy answer-all of Maui! But to be more serious, I will answer this question as thoughtfully as I can in this short forum.

The answer is “it depends”.  It depends on what’s most important to you. Is it the sunny weather? Is the lush rainforest-like gardens (like Haiku or Hana) calling you? Is it being able to walk out your door to a beach? Take a look at my beach info and videos I wrote about here .  Do you want to surf  or windsurf close by?  Or is being near fine restaurants and world class golf courses important to you? Nearby private schools? So many variables on what makes one area better than the next. There are over 24 micro-climates on Maui so if the weather and temperature are important to you, then take a look at this Maui climate and life zone map. 

I have lived in many areas of Maui. I live on the south side now, where you can walk to beaches and restaurants. South side of Maui is the leeward side so its typically sunny and dry. I used to live upcountry in Kula. I was at approx. 4100 ft elevation and I can tell you the climate is entirely different. The temperature in the winter can be in the low 40’s or under at night and days can be in the high 60’s. Summer time is of course warmer. The trade off is that you can getting stunning bi-coastal views, more land for your money and a cooler climate. So again, it just really depends on what you are looking for.  I think you will find Maui has much to offer to suit many preferences.

Due to so many variables, I think a friendly conversation on what you are looking for is the best avenue to see what ares of Maui may want to consider. Feel free to call me Jeannie Kong at 808-276-1832.

2) What is the property tax like on Maui and how is it calculated? The good news is that I have heard many buyers say that Maui property tax is much lower than where they come from!  Here is the skinny on Maui Property tax.  Maui property tax is based on how you use the property. You declare how you will use the property to the tax office (you send in a form) and it may need to be verified or have other documents proving your classification (for example homeowner exemption form requires other documentation-see form below) . Tax year commences July 1 every year. Your property tax is recalculated every new tax period  every year and the tax rate can vary every tax period year.   So your tax can vary from year to year (tax period year).

 

Maui County  Property tax rates are shown per $1000 of net taxable assessed valuation.  The rates shown below are effective July 1, 2017, thru June 30, 2018.

The Residential Tax Rate is  $5.54

The Apartment Tax Rate is  $6.32

The Commercial Tax Rate is  $7.28

The Industrial Tax Rate is  $7.49

The Agricultural Tax Rate is  $6.01

The Conservation Tax Rate is  $6.37

The Hotel and Resort Tax Rate is  $9.37

The Time Share Tax Rate is  $15.43

The Homeowner Tax Rate is  $2.86 (plus an exemption of $200,000 off the assessed value)

The Commercialized Residential Rate is $4.56

Keep in mind that this property tax rate is for Maui County (that includes Lanai and Molokai) ONLY!  Oahu, Kauai and Big Island have DIFFERENT property tax rates.

For example: Let’s say you have a home that Maui County Property Tax department has assessed at $900,000. You are renting it out as a long term rental so your classification would be “residential” at $5.54 per thousand of net taxable assessed valuation.

Example of  Residential Tax rate calculation : $900,000 (sample assessed value)  x 0.00554 (residential tax rate)  = $4986 annual property tax

Homeowners Tax rate with Exemption: Lets use the same assessed value as above, $900,000. You apply for the homeowners exemption (by Dec. 31 of that year) form and you get it accepted. It will kick in in the next tax period. See Maui County homeowner exemption property tax form and read the details on qualifying for it. Please make sure  you have the most current up to date forms and information. To confirm, go to Maui County Property tax website (especially if you are reading this blog after year 2017).

Example of Homeowner tax rate with exemption calculation :

$900,000 (sample assessed value) – $200,000 (exemption) = $700,000 (net taxable assessed value)

$700,000 (net taxable assessed value) x 0.00286= $2002 annual property tax

 

Dates to remember on Maui Property Tax (again please check here at the Maui Property tax website for any updates or changes to dates below as they are subject to change).

Dates to Remember

Date Event
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.

 

3) Is Maui County Assessed value the same thing as Market Value (so I should based my Offer price on Assessed value)? 

Let’s first discuss what is “assessed value” and then how it’s calculated.

Per Maui County Property Tax Website: 

How does Maui County determine my “assessed value”? “Assessments are derived annually using comparable sales that recorded up to June 30 prior to the assessment date. The assessed values represent 100% of the full, unencumbered fee simple market value. The assessor uses acceptable mass appraisal methods and standards to derive market value. If you feel there is an error with your assessment please call our office to speak with an appraiser.”

You say the properties are assessed at market value. Why doesn’t the assessed value reflect today’s market? Why are current sales not used? The current assessment reflects the real estate market for a specified time period. As an example, for the 2008 assessment year, the sale period used is from July 1, 2006 to June 30, 2007. Any sales occurring after this time frame will be reflected in the following year’s assessment.

When a property is improved, it is valued at 100% of market value using market data. Because there are separate land and building tax rates, a portion of your assessment is allocated to land and a portion to building. If you have an assessment question, call or visit our office and ask to speak to the appropriate appraiser.

So as you can see, the “assessed value” is not done in real time, so market conditions could have changed. Other things to keep in mind on the difference between assessed value and market value, County Assessors do not go to every property and take detailed notes on quality of views, specific upgrades, building material quality, specifics on location (for instance is it near an unsightly detraction or some noisy street?), privacy, or etc. Per Maui County they use “acceptable mass appraisal methods “. Your home can be custom as well so again it needs to be qualified.

So therefore this is where your trusted realtor can be very helpful. If you have a full time realtor who works in the field and studies the market relentlessly, then he or she can tell you that one property compared to another’s market value is more or less etc. Your realtor can also tell you the demand for the home or area. All these factors and more determine “market value” versus “assessed value”. Of course, there are times when “assessed value” and “market value” can be in line with each other. This is to emphasize that “assessed value” is just one of the tools you might use to help determine “market value” but definitely not the only tool. My advice is to have your realtor do a detailed market analysis on your property of interest prior to making an offer.

There are more categories such as agriculture rate, etc that are a bit more complicated. Call me for details if you are interested.

Word of caution, Maui County may check and verify your classification status so if you wrongly declare the classification of use, you may be subject to back taxes and penalties.

For more information read Understanding Property Taxes by Maui County.

4) Can I rent out my home or condo? 

Let’s first talk about renting a home (single family residence). Yes, you typically can rent your home “long term” (long term rent is considered 6 months or longer). Please check with your Homeowners Association, CCR’s to ensure rental is allowed. It typically is, but I would always confirm.  Any short term rental on a home would need a permit from Maui County (you are not guaranteed of getting a short term rental permit-that is entirely worth another blog. Call me if you want info on this). However some Homeowners Associations will not allow short term rentals (for instance Wailea Community Association does not allow short term rentals on their single family homes).

Condos: There are condos that allow short term rentals (6 months or LESS,) as well as long term rentals. There are condos that only allow long terms rentals ( 6 months or more ). There are also just a few condos that allow rentals with a minimum of 30 days.  Call me for more information.

All owners of rentals will require a GET (General Excise Tax) License and if doing short term rental, then you will also be required to have in addition to GET, a TAT (Transient Accommodation Tax) license. Call me for more information.

 

5) What is the difference between fee simple and leasehold property? You can read my blog here explaining leasehold and fee simple.

Bonus question: How do I move to Maui? Stay tuned for my next blog on this subject!

Here are some of my favorite listings and 2 of the best buys in Wailea, Maui!

www.180Kainui.com

www.WaileaPointCondo2303.com

 

Thank you and have a great week!

Call or email me with if you are interested in buying or selling Maui real estate. Or if you just a question, I am here to assist.

Jeannie Kong REALTOR®(S)

New developments on Maui, Hawaii

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