Caldwell’s Tax Hike 2014
Honolulu Mayor Caldwell's budget proposal for 2014 looks at creating a new property class for homes that are not owner-occupied and are worth $1 million or more.
There are currently about 7,300 second homes on Oahu. Many of these homes are owned by non-residents who spend only a few weeks or months a year on the island. Caldwell wants to increase tax for these second homeowners, and he is proposing a tax hike of 36 percent higher than the current property tax rate on Oahu's owner-occupied homes. He estimates that this tax hike with generate and additional $26 million a year to the city budget.
I wonder how much of this tax hike, if put into place, will deter foreign and out-of-state buyers from buying homes on Oahu. His plan sounds great only if these second homeowners are still willing to keep their properties here. Otherwise, his plan will just backfire.
On the other hand, we have to remember that Oahu has one of the lowest residential property tax in the country. So the 36% increase may not seem too far out for some out-of-state or foreign buyers after all.
For the first time in seven years, Caldwell also wants to raise hotel and resort property tax rates by about 8 percent. That hike would generate about $8.2 million a year in extra revenue.