Maui Property Tax Exemptions:

A Guide to the Owner-Occupant & Long-Term Rental Exemptions

If you're a property owner in Maui County, you're likely aware of the potential for property tax exemptions, but understanding which ones you qualify for can be a bit overwhelming. While there are several types of home exemptions available, the two main ones that are most common are the Owner-Occupant Home Exemption and the Long-Term Rental Exemption.

In this blog post, I'll break down the details of both exemptions, explaining how they work, who qualifies, and the steps you need to take to apply. Whether you're a homeowner looking to reduce your property taxes or a landlord renting out your property long-term, these exemptions can offer significant financial relief. Let’s dive in and see how these programs can benefit you! * See links below for information on the other islands.

Important Deadlines & Dates

  • Filing Deadline: To apply for the exemption, you must file your claim by December 31 of the preceding assessment year.
  • Effective Date: The exemption will take effect on January 1 of the year after your claim is filed, but the change in your property tax rate will be reflected starting on July 1.

Do You Need to File Every Year?

Once you’ve qualified for the exemption, you don’t need to file every year unless there is a change in your status. However, you are responsible for informing the Real Property Assessment Division within 30 days if anything changes, such as:

  • Moving or selling the property
  • Renting out your property (even for part of the year)
  • Death of the homeowner
  • Any other change that affects eligibility

Failure to report a change in status can result in disqualification from the exemption and a $200 penalty.

Maui Owner-Occupant Home Exemption: 

If you own and occupy a home in Maui County, you may qualify for the Owner-Occupant Home Exemption, a tax relief program that can significantly reduce your property taxes. This exemption reduces your home's taxable assessed value by $300,000 and reclassifies your property into the Owner-Occupied tax class, which comes with a more favorable tax rate.

Here’s a breakdown of what you need to know about the Owner-Occupant Home Exemption and how you can qualify:

Who Qualifies for the Home Exemption?

To qualify for this exemption, you must meet the following requirements:

  1. Primary Residency Requirement: You must occupy the home for more than 270 days out of each calendar year.
  2. No Renting: The property cannot be rented out for the entire year, or even a portion of it.
  3. Hawaii Resident Income Tax: You must file a Hawaii resident income tax return for the year prior to the exemption’s effective date, with your address reported in Maui County. Non-residents or part-year residents do not qualify for the exemption.
  4. Taxes Must Be Current: The property taxes must not be delinquent.
Why Do You Need to File a Hawaii Resident Income Tax Return?

This is one of the key eligibility requirements set by the County Ordinance. The income tax return is necessary to prove your residency in Maui County and maintain your exemption status. It ensures that the home is being occupied as a primary residence, which is the foundation of the exemption.

Maui Long-Term Rental Exemption: 

Maui County offers a Long-Term Rental Exemption that can reduce your property's taxable assessed value by up to $200,000. To qualify, the property must be rented out as a long-term rental for 12 consecutive months or longer to the same tenant. This exemption applies starting January 1, 2022, and offers relief for landlords who provide stable, long-term housing.

If you own a property that’s rented long-term, here’s what you need to know about qualifying for this exemption:

How Do I Qualify for the Long-Term Rental Exemption?

To qualify for the Long-Term Rental Exemption, follow these steps:

  1. Application Deadline: Submit your application for the exemption by December 31 of the year prior to the exemption’s effective date.
  2. Signed Lease Agreement: You must attach a copy of the signed long-term lease agreement for the property, showing that the same tenant will occupy the home for at least 12 consecutive months.
Can I Have Both the Home Exemption and the Long-Term Rental Exemption?

Yes, you can! If you already have the Home Exemption on your property, you can also qualify for the Long-Term Rental Exemption. In this case, you’ll receive a $100,000 exemption on the rental portion of the property in addition to the $200,000 Home Exemption, and your property will remain classified as Owner-Occupied.

Can I Have More Than One Long-Term Rental Exemption?

You can only have more than one Long-Term Rental Exemption if they are located on separate parcels. Exemptions cannot be applied to multiple units on a single parcel.

What if My Property Taxes Are Delinquent?

If your property taxes are delinquent for more than one year, you will not qualify for the Long-Term Rental Exemption. It’s essential to keep your property tax payments up to date to maintain eligibility for this exemption.

What Happens If My Property No Longer Qualifies for the Long-Term Rental Exemption?

If your property no longer meets the requirements for the Long-Term Rental Exemption—for example, if you change the rental to short-term or the lease ends—you must report the change to the Real Property Assessment Division within 30 days. Once reported, your property will be reassessed at its highest and best use, which could result in a higher tax rate.

Can I Rent a Room or Multiple Rooms in My Home Long-Term and Still Qualify for the Home Exemption?

If your home is owner-occupied and you rent a room or rooms long-term, you will not qualify for the full $300,000 exemption. Instead, you would qualify for the $200,000 Home Exemption on the portion of the home that is not rented.

What About Condominiums That allow Short term Rentals?

For condominiums, the rules are slightly different. A one-unit condominium rented long-term (even in a building that allows short-term rentals or is zoned Hotel/Resort) would still qualify for the $200,000 Long-Term Rental Exemption. However, the exemption does not apply if the condo is rented short-term.

What About Multi-Unit Homes or Houses Not Owner-Occupied?

If you own a multi-unit property (like a house with separate rental units) that’s not owner-occupied, the $200,000 exemption applies to the entire property as long as none of the units are rented out on a short-term basis.

The Long-Term Rental Exemption is a valuable tool for Maui property owners who are renting their homes for extended periods. It reduces your property’s taxable value and helps support stable, long-term housing options. Be sure to meet all eligibility criteria, file on time, and keep your property tax payments current to benefit from this exemption!

What Other Exemptions Are Available?

In addition to the Homeowner's Exemption, Maui County offers several other exemptions, including:

  • Disabled Veterans
  • Active Duty Deployed Military
  • Non-Profit Organizations
  • Taro Land (used for taro cultivation)
  • Leprosy (certain medical conditions)
  • Impaired Sight or Hearing
  • Totally Disabled
  • Credit Unions
  • Child Care Facilities
  • Kuleana Land (land passed down through generations)

*The information provided in this blog post was sourced from the Maui County Real Property Tax Department as of December 16, 2024. Please note that property tax exemption rules and eligibility requirements are subject to change. It is recommended to check out the County Code or contact the Real Property Tax Division

Posted by Jyoti Graziano on

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