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A Honolulu property owner is claiming the city’s rule for determining property tax assessments is unconstitutional.
The city released its real property assessments Tuesday.
Ray Kamikawa, attorney for Schuyler Cole, said his client will appeal the city’s assessment for the Residential A classification, which applies to parcels valued at $1 million or more that do not have a homeowner’s exemption. The classification took effect in July.
Kamikawa said the classification is an illegal real property tax classification because it classifies properties based on the value of the property rather than the property’s use.
The Residential A classification sets up a higher tax rate of $6 per $1,000 of assessed value for residential use properties appraised at $1 million or more, higher than the $3.50 per $1,000 of assessed value for similar properties under $1 million.
“This higher tax rate is made even more egregious because the $6 rate … is triggered when the value of the property increases by one dollar, from $999,999 to
$1 million, abruptly increasing the tax by $2,500,” Kamikawa said in a statement. “This cliff effect implicates violations of the Equal Protection Clause of the Hawaii and United States constitutions.”
He said the cliff effect harms local residents who have had the same property in their families for generations and may be relying on such property for supplemental income, while property values have increased through no fault of their own.
“Furthermore, local taxes cannot, under the United States Constitution, have a disproportionate impact on out-of-state taxpayers,” Kamikawa said.
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