Proposal for Taxes on Vacant Homes in Honolulu

Just as many American cities have had and continue to have affordability issues in housing, the same is true for the city of Honolulu in Hawaii.

Currently, Honolulu has a large number of homes that have been purchased by investors but are currently without a valid lease or are completely unoccupied, which does not help the administration address the housing shortage.

In an attempt to find a possible solution to this crisis, lawmakers have proposed the creation of a regulation that would allow for an extra tax on homes that are not inhabited and are located on the island of Oahu, more specifically in the city of Honolulu, where the number of people affected by the lack of housing is most evident.

Hoping to be sanctioned by the Committee on Housing, Sustainability, and Health, the primary goal of this law is to collect an extra tax that would range from 1 to 3% of the value of the home when it is vacant or without a rental contract.

Despite being partially supported by owners of homes used for short-term rentals or vacation periods, this measure is still unclear in terms of how it will be implemented and the destination of the funds collected by the administration.

Although there are many opponents to this new law in the city, its defenders believe that collecting this money will encourage owners to sell or rent their vacant homes and will help the real estate market increase the supply of housing and also assist the administration in the fight to overcome the affordable housing crisis.

In addition to the usual property taxes, officials argue that collecting this extra tax will serve to develop more projects, which will lead to more housing offers and a reduction in prices. Likewise, this charge will prevent speculation fostered by the owners of these vacant homes and will encourage them to sell or rent such property.

Among the problems observed by opponents is the difficulty of determining which property is considered unoccupied, what rate would be applied, and how the administration will use the money collected.

Due to opposition from multiple owners, the administration has made it clear that homes used for short-term rentals will not be considered vacant and, therefore, will be exempt from this tax.

Regarding the use of the money collected, the proponents of the regulation have stated that a percentage of the funds should be allocated to the city’s budget, in order to use them for the protection and coverage of the basic needs of the population, while another percentage should be directed to the Honolulu housing fund.

Available foreclosures:

Honolulu: 150 homes available.

Oahu: 200 homes available.

By Elias DaSilva | October 10, 2024.