Proposed empty homes tax gets exemptions added for Hawaii residents as final vote nears

HONOLULU (HawaiiNewsNow) – A bill aimed at cracking down on vacant homes on Oahu by increasing taxes is expected to face a final vote at the Honolulu City Council in the coming weeks.

It comes after the proposal has been revised several times because of questions and concerns from the community.

Bill 46 would add an incremental 3% yearly tax for vacant dwellings on a property that would be rolled out over three years.

Some owners could end up paying tens of thousands of dollars more in property taxes, but a recent change to the measure adds exemptions for Hawaii residents.

The 2020 U.S. Census reported roughly 35,000 unoccupied housing units on Oahu.

Council Chair Tommy Waters, who introduced the bill, said it’s meant to get people to rent out or otherwise free up their unused units.

Under the measure’s current language, the higher tax would be placed on homes that are unoccupied for six months.

“We’re trying to get creative to figure out how we can get our local people to stay here. We can’t build our way out of this solution,” said Waters.

This week, the council’s budget committee narrowly passed the bill in a 3 to 2 vote after making several changes.

One change would allow Hawaii residents to request an exemption for a second home they own.

To reduce administrative costs that would likely come with a new tax, the bill proposed it to operate under the already running property tax system by adding a new class.

There’s also changes to the bill’s language to comply with both with state and federal law to try and avoid potential lawsuits.

But still some residents still believe it will do more harm than good.

“Trying to enforce this and make sure that it’s equitable is going to be a nightmare,” said Hawaii Kai resident Natalie Iwasa.

“My other concern about this is the landlords, they obviously have a stake in this but if they miss a deadline, it is no skin on their backs you know why? Because they will increase the rent for people like me and other families who cannot afford a home,” she added.

But younger constituents seem to support the proposal.

“This is not about punishing anyone. It is about making housing accessible to the people who call Hawaii their home,” said one testifier.

Bill 46 could still undergo even more revisions.

The bill is expected to go for a final vote on December 11, where public input will also be taken.

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