LIHUE — Families that have lived on their properties for generations but whose names are not on title are one step closer to applying for the same tax exemptions other owner-occupants enjoy.
Bill No. 2756, which aims to grant real property tax exemptions to family members, now heads to the mayor for final approval after passing through the County Council’s second reading on Wednesday.
The bill, introduced by Councilmembers Mason Chock and Luke Evslin, is beneficial to families that have lived on their land for generations and have no intention to sell but can’t keep up with taxes based upon nearby rising property values.
It allows them the opportunity to move from their current “residential” or “residential investor” classifications to a variety of others, including homestead.
Under their current residential tax classification, they may be paying as much as $6.05 per $1,000 assessed value. For a property worth millions of dollars, this could mean more than $20,000 a year in taxes. On the other hand, under the homestead classification, they would pay about half that at $3.05 per $1,000 assessed value. And, if eligible, they also have the opportunity to apply for other exemptions, such as low income.
Additionally, if an applicant can prove they are a lineal descendant of the original titleholder, they can apply for the kuleana exemption. The state Office of Hawaiian Affairs has agreed to step in and help with identifying blood-related family members.
The proposed amendments would ease some tax burdens, as long as no living person is named on the title, and as long as a family member can prove that they are related to the property owner by blood, marriage, a “reciprocal beneficiary relationship,” or as step-relatives.
There’s still more on the administrative side, however, that will need to be done before the bill will take effect, Chock said.
“We won’t be looking at this relief until next cycle, September 2020,” he said.
Chock added that the bill does not make any claims to ownership; it does not clear title. Over time, a title can get “clouded” and make it even more cumbersome and expensive for families to receive the same kind of tax relief that every other property owner on the island, if eligible, is allowed to apply for.
Residents of the properties will still have “every incentive to clear title,” even though it can cost up to $100,000, Evslin said during a previous council meeting. Providing substantial tax relief may help some families do so, he said.
County Finance Department Director Reiko Matsuyama said that it’s unclear how many families would benefit, as there is no software to track that information. But Evslin said that it will likely only be a small number of people who will be able to take advantage of the bill, and that it’s just the first step to combatting a much larger problem so families can stay on their ancestral lands.
Coco Zickos, county reporter, can be reached at 245-0424 or firstname.lastname@example.org.