A new bill could provide some tax relief for Oʻahu homeowners who offer up their rental units as long-term housing.
The Honolulu City Council’s Bill 48 would apply to properties where renters live for at least a year.
Rental properties falling under the “Residential A” category are normally taxed at a higher rate than “Residential” homes where owners live, but the measure would offer the lower tax rate if owners have long-term rental units.
“ If you don't live in the home, then you get put into this 'Residential A' rate. What this bill would do is say that … (if) you fill the home with a renter instead, then we'll knock your tax down. And that's a good idea,” said Joe Kent, the executive vice president of the Grassroot Institute of Hawaiʻi.
The bill could incentivize homeowners to offer rental units for residents. That, in turn, could increase the local housing supply.
Bill 48 would also give homeowners the ability to make a 10-year dedication to the property. The property would be exclusively used as a long-term residential rental during the dedication period at the lower tax rate.
The Grassroot Institute of Hawaii opposed that part of the measure, saying it could serve as a punishment for homeowners who don’t decide to go through the entire dedication period. Those owners would have to pay back the savings in real property taxes.
A long-term rental tax bracket already exists in the County of Maui, and the County of Hawaiʻi is considering a similar measure.
The bill, along with a suite of other real property tax measures, were introduced last week and are scheduled to be heard during the full council today.
