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The Honolulu Advertiser
Posted on: Tuesday, January 16, 2007

Just 1,688 get new property tax break

By Robbie Dingeman
Advertiser Staff Writer


Today is the last day for Honolulu property owners to file an appeal to their property tax assessment, to change exemptions or appeal a decision on a new tax credit offered last year for those with household income of $50,000 or less.


LEARN MORE: www.honolulu.gov/rpa/

By phone: Call the Real Property Assessment Division at 527-5510 (Honolulu) or 692-5541 (Kapolei), and some satellite city halls (call first).


If you applied and were turned down for a tax credit, you will have received the form to appeal and must get it postmarked today. If you have more questions, call the Treasury Division at 523-4856 or go to Honolulu Hale, Room 115.

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A new tax credit intended to give relief to residents who need it the most those earning $50,000 or less didn't help half of the property owners who applied, according to city officials.

City Treasury chief Edlyn Taniguchi told The Advertiser that 3,269 people applied for a new credit that essentially caps the taxes of property owners at 4 percent of their income.

Taniguchi said more than half of those who applied 2,496 did qualify, but only 1,688 will benefit.

The reason: The rest have property taxes that are under the cap.

For example, an owner who earns $50,000 would have her tax capped at $2,000, but if her property tax was $1,200, she wouldn't benefit. If the tax bill was twice as high, or $2,400, the credit could save her $400.

"You can qualify and not benefit," Taniguchi said. "You meet the income and all the other requirements, but if your tax is less than the 4 percent, then it doesn't help."

City Council Budget Chairman Todd Apo said the relatively small number of people helped by the tax credit in this first year raises questions about whether it's doing enough.

Part of the difficulty is that officials do not know how many of those who qualified, and met income limits, actually applied.

"I have no sense as to whether that's 80 percent of the people who actually qualify, 50 percent or 5 percent I don't know," Apo said.

"It's a decent number," he added.

Apo said the council and administration are open to tweaking the relief measure.


After watching property tax bills double and triple over the past four years, hundreds of owners complained last year that the increases strained the budgets of people with no intention to sell, especially those on a fixed income.

The council arrived at the tax credit as a way to go beyond the usual exemptions that give a break to owner-occupants and to the elderly and disabled and prevent people from having to pay a significant chunk of their income for taxes.

Apo said the council will consider increasing the qualifying income so that more people are eligible or providing additional help for the elderly by reducing the percentage of income that they would pay.

"Maybe it goes down to 3 or 3.5 percent," he said.

Taniguchi said the total credit so far adds up to about $1.5 million in lost revenues for the city since smaller taxes paid by residents equals smaller revenues collected.

She said the city denied 773 applications, most of them related to income. The ordinance includes these conditions:

  • The combined income of all the titleholders on the property may not exceed $50,000.

  • There must be a home exemption on the property (given to owner-occupants).

  • Those on the title as owners cannot own any other property.

  • Taxes due must exceed the 4 percent of the combined income of owners.

    Last year, city budget and fiscal services director Mary Pat Waterhouse without access to income information to homeowners estimated the credit would cost the city some revenue from the tax break, but she gave a broad range of $3 million to $40 million.

    Taniguchi said those denied have until today to appeal the denial. The appeal form was sent out with the denial.

    The city notified applicants last month whether they were eligible for the credit. The credit will be applied for the 2006-07 and 2007-08 fiscal years, which run July 1 to June 30.


    Changes to the standard homeowner's exemption also take effect this year.

    Honolulu's basic homeowner's exemption has been set at $40,000 for decades. That means that $40,000 is subtracted from the assessed value of the property, and the homeowner pays a tax on the balance.

    This year, the schedule of multiple exemptions based on the homeowner's age changes from four tiers to two, doubling for those under age 65, who will receive a standard $80,000 homeowner exemption. Those 65 and older will get a $120,000 exemption. There also are exemptions for people with physical disabilities or Hansen's disease, and for disabled veterans.

    Taniguchi said her office is reviewing how the tax credit process can be simplified because the proof of income requirements in this initial year proved hard to deal with for some.

    "We're trying to make it easier for the taxpayers," she said.

    This year, she said, the analysis also needs to examine how the exemption changes affect what is collected.

    "Doubling of the exemption reduces the base of the tax," she said. "We need to figure out how each action is affecting the other."

    Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com.