Big Island Property Tax Assessment Explained

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Why Can Market Value Differ so Much From the “Assessed Value” of a Property on the Big Island?

Last fall, we called the Hawaii Island County Tax Department to ask them about the tax assessment process, and here is what they told us:

  • There are 135,000 parcels on the BI and 9 assessors (short 4).
  • All properties are re-assessed each year in January.
  • They do not go to each property individually (that would be a physical impossibility), they conduct mass assessments.
  • Every property is categorized into a neighborhood and they use a land pricing index based on market value to determine assessment amount.
  • They only re-assess if there has been an appeal filed, if there is a “mistake” and it doesn’t look right and it is brought to their attention, or if a new structure has been built and the permit is finaled.
  • First priority are new homes or new additions.
  • The tax office assesses by what structures are actually built on the property, not by what is permitted.
  • They do rely on filed and completed permits to know if a property needs re-assessment.

Differences in the Way Property Taxes are Determined in Hawaii Versus the Mainland

In Hawaii, tax rates are determined by dollar per 1,000. On the mainland they use percentages. Also on the Big Island, there is a yearly 3% cap on property tax increases, a benefit in an up market.

In a down market, as the values of homes decrease the assessment can go up 3% regardless, therefore, assessed value can increase even as the market decreases. If brought to the tax office’s attention, in a down market, they will reassess accordingly, but only if the homeowner appeals the assessed value. The appeal form can be found on the Real Property Tax Website under “Forms.”

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