LIHU‘E — If you own a home, you may have to figure out creative ways to afford a potential property tax increase looming over the horizon, more precisely starting in July. That is, if you are elderly or poor. The
LIHU‘E — If you own a home, you may have to figure out creative ways to afford a potential property tax increase looming over the horizon, more precisely starting in July. That is, if you are elderly or poor.
The Cost Control Commission recently asked the Kaua‘i County Council to raise by 300 percent the bare-minimum real property tax on Kaua‘i. Now, the commission is considering raising the age limit for senior citizens to qualify for a hefty exemption.
“It’s my feeling that we should have one (tax) assessment for people under 65, and one assessment for people over 65,” Commissioner Sandi Sterker said Monday at a commission meeting in Lihu‘e.
Currently, resident homeowners receive a $48,000 tax exemption if they are younger than 60. Once they reach the age bracket of 60 to 69 years old, the exemption doubles to $96,000. Once they turn 70, the exemption goes up again, to $120,000.
Sterker proposed to do away with the middle bracket, 60 to 69, delaying an increased tax relief based on age until resident-homeowners reach 65 years old. On the positive side, at age 65, resident-homeowners would receive a $120,000 tax relief.
Part of Sterker’s reasoning was that there are a lot of folks between the ages of 60 and 65 who are still working, while there are many who are older than age 65 who are not working anymore.
“When you’re 65, Medicare comes in, the whole thing — this big flag comes up,” Sterker said.
Chair Dirk Apao said the commission is trying to simplify things for the county staff who does real property tax assessments.
Commissioner Arryl Kaneshiro asked to send a request to the county Real Property Tax division to find out the ramifications. After all, if the commission ultimately decides to ask the council to introduce a bill proposing such changes, commissioners will have to justify it to the council.
“It would be hard to go to the council and say ‘We’re redoing this at this rate to make it simpler for Real Property Tax (Division),’ without having the tax ramification,” said Kaneshiro.
Kaneshiro added that he didn’t know if the proposal would increase revenues to the county.
Commissioners decided to go with Kaneshiro’s idea to send questions to the administration, even though Sterker reminded them that county Finance Director Wally Rezentes Jr. says in a communication dated Nov. 30 that “it would be nearly impossible to isolate the impact of the additional home exemption for age as there can be layered exemptions for low income, disability or multiple owners with multiple home use exemptions.”
Exemption codes for home use exemptions are the same, regardless of age, according to Rezentes. Therefore, there is no definitive way to segregate the amount of taxes paid by any specific age bracket.
“The counts of exemptions within each of the four exemption types (fee simple — one home; leased — one home; fee simple — multiple homes; and leased — multiple homes) is generated by a report which establishes the minimum and maximum birthdates ranges; however, there is no current report that ties those exemptions to the actual property taxes paid by age,” Rezentes says in the communication.
The only financial impact that could be estimated is the potential tax relief that the exemption provides, according to Rezentes.
While explaining the proposal, Sterker repeatedly mentioned the City and County of Honolulu, which has age-related exemptions similar to what the commission may propose. Sterker also discouraged following Maui’s exemption model, which offers a $200,000 tax exemption.
When Kaneshiro asked Sterker specifically if she was basing the proposal on a comparison with O‘ahu, she responded that she picked age 65 because it’s the age when people can retire and receive Medicare.
While the new proposal is still in its embryonic stage, the council’s Finance and Economic Development Committee today will have a third look at Bill 2444, introduced by request of the commission.
The bill proposes to raise Kaua‘i’s minimum real property tax — charged to Hawaiian homesteaders and certain residents — from $25 to $150, a 300 percent increase.
Some council members and members of the public who testified at past council meetings have questioned the commission’s role in proposing property tax increases, saying its main focus should be on saving money for the county by controlling cost.
At the end of Monday’s meeting, Sterker was voted chair for 2013, and Kaneshiro was voted vice chair.
