Posted at 2:29 p.m., Tuesday, August 14, 2007
Homeowner exemption examined on Maui
By HARRY EAGAR
The Maui News
Joe Pontanilla, chairman of the Budget and Finance Committee, revived a bill that had been discussed but shelved last year that would give the county powers it does not have now to validate and investigate claims for the homeowner's exemption.
He noted that the exemption has become relatively more valuable since the council doubled the deduction to $300,000.
With the owner-occupied residential tax rate of $2 per $1,000 valuation, the exemption is worth $600 in the current fiscal year.
The bill was modeled on the Honolulu statute. The proposal was to provide five ways that a homeowner could demonstrate to the Finance Department that he or she is, indeed, a resident.
They were:
The taxpayer had a mailing address in Maui County.
Finance Director Kalbert Young pointed out that the hurdle to get a resident rate at the county's Waiehu Golf Course is more stringent: That requires a copy of the resident's state income tax return.
The 270-day requirement confused council members Michelle Anderson and Bill Medeiros, who took it to mean that a taxpayer would have to live in the house more than nine months of the year to get the exemption.
Anderson wondered how anyone would prove that.
Young explained that the key item is not where you spend your time, but what you declare to be your principal residence.
You can have only one in the whole country. Council Member Riki Hokama commented that he knew of people who lived in Maui six or seven months of the year but claimed their principal residence elsewhere.
He presumed that was because of tax consequences.
Young agreed, saying that the chief example is Alaska.
Alaska residents get a yearly payment from the state's oil royalties. That payment is worth two and a half times the Maui homeowner's exemption — multiplied by the number of people in the family.
Young did not indicate that there has been great abuse of the homeowner's exemption, but at the same time, the county has written neither an ordinance nor rules to prevent abuses.
He said most investigations would be set off by an inquiry from a neighbor. You can learn whether your neighbor is claiming the exemption in the open real property tax records.
Young said he was not wedded to the 270-day test, although that is what Honolulu is using.
Since the challenged taxpayer would have to demonstrate eligibility with any of the five proposals, the 270-day test would not necessarily be the first one presented anyway.
However, the committee quickly reduced the tests to four. Council Member Gladys Coelho Baisa said a local mailing address was too easy, and the rest agreed.
She said that when she was at Maui Economic Opportunity, her staff had successfully used rent, utility and similar records to help immigrant agricultural workers prove residency to the federal government in order to get permanent resident alien status.
Late Monday, the committee lost its quorum, but it was close to settling on a system.
Much of the proposal was noncontroversial.
Corporations, partnerships and companies cannot claim homeowners' exemptions.
However, a homeowner who uses part of the home for a commercial purpose (like renting out a bedroom) still can get an exemption for the part he lives in.
If you have claimed a property tax exemption for a principal home anywhere else, you cannot claim one here.
Separated husbands and wives can claim a total of $300,000 for the two residences they use. The county lets them sort out who gets how much.
Pontanilla said he planned to schedule another session as soon as possible to wrap up work on the bill.
For more Maui news, visit The Maui News.
