Thousands of houses are empty on Maui. Would higher taxes change that?

“From an economics perspective, if you can own a second home in Maui, that’s not an essential good—that’s some version of a luxury good,” Kenna StormoGipson, the housing policy director for Hawaiʻi Appleseed Center for Law & Economic Justice, told council members at a meeting last month. “We have a lot of people in Maui that don’t have the essential good of a house.”

In recent years, Maui County officials started taxing properties at different rates depending on their value—for example, more expensive houses are taxed at higher rates. That isn’t the norm across the continental U.S., where many states don’t give counties the authority to set their own property tax categories and rates.

Even among counties in Hawaiʻi, Maui has the highest number of tax categories based on both property type and value, a policy that some housing advocates have touted as the most progressive in the state.

But owners who don’t live full time on the property still pay lower tax rates than national averages, according to a recent analysis by StormoGipson. In Maui County, “non-owner occupied” property is a broad category that can include investment properties, second homes and long-term rentals, although long-term rental property owners can apply for a special tax exemption.

StormoGipson, who helped develop Maui County’s 264-page affordable housing plan, said raising rates on those homes could make them less desirable to investors, who’ve increasingly flocked to Maui in recent years. In 2020, about 70 percent of homes purchased went to people who didn’t plan on using them as a primary residence—a big jump from 50 percent in 2016, according to research by StormoGipson.