Question: Is a homeowner who rents out the bottom floor of a two-family home and lives on the top floor entitled to the full homeowner’s exemption? Would the homeowner receive the full value of the homeowner’s exemption if they live on the property, regardless of the home size (such as a so-called “monster home”) or the amount of the square footage they rent out? Is there a way to report people illegally claiming the home exemption, such as a homeowner who no longer lives in the house and is fully renting it out but is still claiming the exemption?
Answer. You are referring to Oahu’s home exemption, which reduces property taxes for owner-occupants. The home exemption amount is $120,000 for owner-occupants under age 65 or $160,000 for owner-occupants age 65 and older — the applicable amount is deducted from a residential property’s assessed value, and the real property tax due is calculated on the balance.
Here are answers to your questions from the Honolulu Department of Budget and Fiscal Services’ Real Property Assessment Division, via Ian Scheuring, a spokesperson for the mayor’s office:
Yes, “it is typical for a home exemption claimant (homeowner) who rents out the bottom floor of a two-family home (property) and lives on the top floor to receive the full homeowners exemption amount.”
However, this does not mean that a homeowner who rents out part of their primary residence always qualifies for the full home exemption amount. “The home size or the amount of the square footage rented may impact the homeowner’s exemption amount depending on the overall percentage used for their use and the total assessed value of the property. If the assessed value of the non-rented area or the portion of the property used by the claimant is less than the value of the exemption amount, the exemption amount shall not exceed the value of the non-rented area.”
(RPAD’s website explains that anyone with a home exemption who starts renting out part of their primary residence must file a new Home Exemption Claim Form BFS-RPA-M-8-10.3 and answer question E, which asks how much square footage is used for rental or business purposes.)
As for reporting home exemption scofflaws, “to launch an investigation by our compliance unit, people may report a possible fraudulent home exemption claim by the property owner if the property has a home exemption but the claimant may not reside on the property. This can be done by calling our office, phone: 808-768-3799; submitting a written letter to Real Property Assessment Division, 842 Bethel St. Basement, Honolulu, HI 96813; or by sending an email to bfsrpmailbox@honolulu.gov. More information of the situation is beneficial in helping us investigate the claim in an expeditious manner. At minimum, we ask for the property address and/or tax map key (parcel ID). The person launching an investigation may choose to remain anonymous and request for the results of the investigation.”
You can find more information about Oahu’s home exemption, which is spelled out in the Revised Ordinances of Honolulu Sect. 8-10.3, on RPAD’s website, realpropertyhonolulu.com.
Auwe
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