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A proposal under consideration by the Kaua’i County Council
would drive property taxes up dramatically for hotels and
resorts. If applied in Kaua’i, it will likely be adopted in
other counties of the state as well.
Higher Taxes for Buildings
The plan centers on
taxing buildings at a rate three times higher than land. The
Kaua’i Real Property Tax Committee conducted studies, which
found the type of building determines the need for county
services such as fire protection, roads, parks and trash
removal.
Officials
rationalize that bigger buildings, such as resorts, should pay
more to correlate their tax rates with their use of county
services.
Fewer Categories
Also under the
proposal, the number of property tax categories in Kaua’i would
be changed from the current eight to just four: residential,
resource lands, general and resort.
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Residential -
taxes for homeowners would be cut over 30%
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Resource lands
- farmland and conservation land would enjoy an average tax
reduction of 65% from current rates.
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General -
includes both commercial & industrial property and vacant
land
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Resort –
hotels, time-share condominiums and short-term rentals would
be hit with property tax increases averaging 24%.
Resorts are the
backbone of the Hawaii real estate market, yet they are
excessively overcharged. This plan promotes open space and gives
homeowners a tax break, but resorts have to pick up the tab.
Unfortunately,
outside of state legislative propositions, there is nothing
resort owners can do about rising tax rates except be aware of
what county officials are proposing and budget accordingly. The
best defense is an accurate property assessment, which often
requires a tax appeal.
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