Save on Your Property Taxes with Maui County’s Long Term Rental Exemption
Are you aware that a long-term rental Maui property will be eligible for a long-term rental tax exemption beginning January 1, 2022? Maui County’s Long-Term Rental Incentive Program provides property owners with the opportunity to reduce their tax burden while promoting long-term housing solutions.
Maui long-term rental properties rented for a minimum of 12 consecutive months to the same tenant, without a home exemption, can receive a tax exemption of up to $200,000.
This exemption, now in its second fiscal year, is applied on January 1 of the following property assessment year and will be reflected in the July property tax bill.
How Maui’s Long-Term Rental Property Tax Exemption Works
The exemption is applied on January 1 of the following property assessment year and will appear on your July property tax bill. Whether you own a single rental property or multiple units across different parcels, each qualifying property can benefit from this significant tax break.
Key Qualifications:
- – Lease Agreement: Maintain a signed lease agreement with the same tenant for at least 12 consecutive months.
- – Timely Submission: Submit a copy of the lease agreement to the Maui County Property Tax Department by December 31.
Additional Benefits:
- – Multiple Properties: Own more than one rental property? If they’re on separate parcels, each can qualify for the $200,000 exemption.
- – Owner-Occupied Properties: If you live in your primary residence and also have a rental, you can receive an additional $100,000 exemption alongside your homeowner exemption. Your property will still be classified as Owner-Occupied.
- – Flexibility for Sequential Tenants: Even if different tenants occupy your property over time, you can still qualify, provided the lease term for each tenant is at least 12 months.
Important Considerations:
- – Commercial Exclusions: Portions of the property used for commercial purposes do not qualify for the exemption.
- – Delinquent Taxes: Properties with delinquent tax payments for more than one year are ineligible.
- – Self-Rentals: Renting to yourself doesn’t qualify, but renting from an LLC or other qualifying entity does, as long as it meets the program’s criteria.
Specific Situations:
- – Sequential Tenants: Properties rented to different tenants sequentially over time still qualify for the $200,000 exemption.
Many different situations are covered by the long term rental property tax exemption. If your property is occupied and rented out to different tenants, you are still be eligible for a $200,000 long-term rental exemption. If a portion of the property is used for commercial purposes, no exemption will be granted for that portion. Only the portion exclusively used for long-term rentals will be eligible for an exemption.
You may occupy a portion of the property and rent out a separate section. You will be eligible for a $100,000 long-term rental exemption in addition to the home exemption, and your property will still be classified as Owner-Occupied.
How to Apply:
In order to qualify for the exemption, you must apply by December 31 and provide a copy of a signed long-term lease agreement. You can find more information and the Maui long term rental application at the Maui county government RPA forms page.
Why Maui’s Long Term Rental Property Tax Exemption Matters
Maui’s Long-Term Rental Exemption program offers substantial savings for property owners while encouraging stable, long-term housing options, which is very much needed by the Maui community. By taking advantage of this program, you can save up to $200,000 per property, benefit from additional exemptions if you’re a homeowner, and ensure your investment aligns with Maui’s housing goals.
Where to Learn More
Learn more about this program at the Maui County Government website.
If you are interested in purchasing an investment property to rent out, and taking advantage of the long term rental property tax exemption, contact us today.
With Sincere Aloha,
