Maui council urged to raise tax on second homes, short-term rentals to raise money for affordables

Leaving property taxes at the lowest in the nation could actually spur investment home buys in Maui County, according to a presentation Monday afternoon at council’s Affordable Housing Committee. 

About 70 percent of purchases in 2020 were non-owner occupied, second homes, Hawaiʻi Information Service said. Meanwhile, Hawaiʻi this year ranked lowest in the nation for property taxes by state, according to a WalletHub study published this month. 

“If you have a lower property tax rate than the mainland average, you are actually incentivizing investment property ownership,” said Kenna StormoGipson, director of housing policy at Hawaiʻi Budget and Policy Center. “People do talk to real estate agents and say, ‘Oh they have a lower rate? Let me buy my investment home in Maui instead of New York or California or wherever.’” 

At the meeting, StormoGipson presented ideas on raising property taxes on second homes and short-term rentals to generate money for affordable homes in Maui County.  

She was part of the county-commissioned Maui County Comprehensive Affordable Housing Plan released last year that outlines ways to create 5,000 affordable homes in five years. A part of that plan recommends funneling about $58 million yearly to the county’s Affordable Housing Fund. 

StormoGipson said one way to generate that revenue is to hike property taxes for investment homes to align with the national average. An investment home is typically considered a second home and not the owner’s primary residence; property tax data shows that it is not owner-occupied.