Did you know Hawaii has the lowest property taxes in the United States? However, property in Hawaii is expensive which means homeowners pay a lot of money towards property taxes.
As a real estate investor, it's important to beware of the taxes requirements and other fees. Missing a payment can be costly and decrease your profits. Keep reading to learn everything you need to know about Hawaii property taxes.
Hawaii GE Tax
If you have a rental property you need to know about the GE tax or the general excise tax. It's a tax on all gross rent. Keep in mind you'll have to pay this tax whether you made a profit on your property or not.
The majority of cities charge 4% to 4.5%. However, there are a few cities including Oahu and Kauai that have a surcharge of 0.5%.
You do have the option to charge your tenants the GE tax but it must be in the lease. Depending on how much is due, it can be paid monthly, quarterly, or every six months.
Late Fees
Paying your taxes on time is a great way to ensure you aren't wasting money. There is a 5% fee per unit per month if you don't pay the GE tax.
If you file late there could also be a 25% fee. You could face criminal charges as well.
Transient Accommodation Tax (TAT)
You will be required to pay the transient accommodation tax if you have short-term rentals. The state classifies "short term" as under 180 days. Keep in mind this tax is 10.25% and doesn't replace the GE tax.
The State of Hawaii offers renters an incentive to give their landlord's name and contact information. If you decide not to report your rental property or forget to pay the tax your tenants may have already supplied the state with your information.
How to Calculate Property Taxes
As a landlord learning to calculate your Hawaii property taxes will prove to be beneficial. On Oahu property is broken down into different categories. Those categories determine the property tax rates.
If you rent out a room in your home but still live on the property you'll pay 0.65% of the assessed value of your property. Say you rent out your entire home, condo, or apartment you'll pay 1.39% of the assessed value.
Out of State Landlords
The state of Hawaii requires each rental property have a local contact or management company. In case of an emergency, your tenants must have someone to call.
Hawaii Property Taxes
There are different types of property taxes and you must file and pay all of them on time. Failure to do so could cost you your profit and potentially hinder you from expanding your real estate portfolio.
Managing your rental property and keeping up the Hawaii property taxes can be overwhelming and frustrating. If you have questions or don't know where to start, contact us today for professional help.