EHT: Other Approaches

Two ideas have emerged to create incentives using the property tax to convert Hawaii’s 75,000 vacant homes to homes that are occupied by residents.  These are Maui County’s Long Term Rental Exemption (LTRE) and the Empty Homes Tax (EHT).

LTRE.  Maui County adopted LTRE two years ago.  It reduces the property tax for residential properties that are rented by a long-term (12 months) lease.  Homes rented on a short-term basis to visitors and homes that are not under a long term lease for a portion of the year are not eligible for LTRE.

In 2023-2024, about 3,800 Maui properties qualified for LTRE. It is unknown whether most or all of these properties were already being used for long term rentsls. LTRE has not produced the hoped for reduction in short term rentals and empty homes.  It is unknown whether LTRE will be able to be effective in reducing empty homes. What is known, however, is that LTRE has reduced tax revenues to Maui County by $15 million in the past 2 years.  To make up for the shortfall, an idea has been floated to raise the property tax on all properties. 

EHT.  An EHT bill is under consideration by the City & County of Honolulu.  EHT is a tax on residential properties that are not used at least 6 months a year as the principal residence for an Oahu resident.  Short term rental housing and dwellings not being used as the principal residence of an Oahu resident would be subject to the tax.  Homes for Oahu residents, whether they own or rent, would not be affected by EHT. 

EHT has been adopted by several cities in the U.S. and by jurisdictions in Australia and Canada.  Reliable data about the effectiveness of EHT are available.  A study shows, for example, that EHT adopted seven years ago by Vancouver, Canada, has resulted in the conversion of more than 50% of its empty homes to homes for Vancouver residents.  Vancouver’s EHT has also generated $142 million in tax revenue since its adoption, which has funded the development of numerous affordable housing programs.