Empty Homes Tax – Diving into the Details
The Empty Homes Tax (EHT) is proposed in Bill 46 (2024), in Honolulu City Council.
Purpose of EHT: The US Census found 34,253 vacant homes on Oahu. The EHT will: (1) encourage existing owners to rent or sell vacant housing stock for use as homes for local residents;(2) increase the City’s supply of homes to better meet demand and reduce market pressures that cause high and unaffordable prices; and (3) raise funds for affordable housing and homeless solutions. The EHT will not raise taxes on homes occupied by long term residents.
Empty Home Definition: A residential dwelling on Oahu that is NOT the “principal residence” of a homeowner, renter or other permitted occupant, who is an Oahu resident, for at least 6 months of the tax year, and that does NOT meet any EHT exemptions.
EHT Exemptions: “Principal Residence” of a homeowner, renter or permitted occupant (see above); plus properties subject to court proceedings, active sale efforts, transfer of title, and pending building permit for substantial renovations. Also, properties where the owner has died, been deployed, or requires long term medical care in a facility. Additional exemptions and certain limitations apply.
Tax Rate: 1% for year 1, 2% for year 2 and 3% for years 3 and thereafter, based on assessed value for the tax year.
Use of Tax Revenues: EHT tax revenues “may be used to increase the city’s supply of affordable homes and address homelessness.” We are seeking dedication of these revenues to assure they are spent for this purpose. Up to 5% of EHT revenues can be used for EHT implementation & enforcement, including additional staff.
Implementation: Property owners will be required to file an annual declaration as to the status of their property during the past year. The EHT will apply if there is no exemption claimed for the prior tax year, or if no timely declaration is filed, or if an owner is found to have filed a false declaration related to an empty home. Property owners have a duty to supply certain information if requested, to confirm any exemption they have claimed from the EHT.
Enforcement: Includes audit and investigation by the City, with adequate staffing assured from revenues from the EHT. The City may request an owner to submit information and evidence for proof of any exemption claimed. Tax liens and/or foreclosure are available for owners in continuing non-compliance with EHT duties. Substantial penalties ($250 - $10,000) apply for false declarations, failure to cooperate with City investigation, and other violations. Owners have rights of appeal.
This summary is based on the current terms of Bill 46 (2024), and is subject to further details in Bill 46 and to any amendments that may occur before Bill 46’s passage. The text of Bill 46 is at: https://hnldoc.ehawaii.gov/hnldoc/document-download?id=22039
Questions or comments? Please contact us at info@hihousing.org.