Bills offer property owners tax relief

Proposals include a limit on tax increases and a one-time credit

Honolulu City Council leaders propose limiting future property tax increases for homeowners who earn less than $75,000 a year or will dedicate the land for their home use for 10 years.

A one-time tax credit was also proposed yesterday in legislation introduced by Council Chairman Donovan Dela Cruz and Vice Chairwoman Ann Kobayashi.

EASING THE BURDEN A glance at some features of the property tax bills: » Provide relief in fiscal 2007 to people who file petitions for the exemptions next year. » Limit future property tax increases for homeowners who earn less than $75,000 a year or who will dedicate the land for their home use for 10 years. » A one-time tax credit -- amount to be decided -- if the household income falls within federal median income limits. » What next: Jan. 23 public hearing

Dela Cruz said the bills are "a step toward substantial relief" for owners who have been slammed with double-digit-percentage increases in taxes as real property assessments soar in Oahu's real estate boom.

The bills aim to help "retired seniors on fixed incomes, single parents and low-income families (who) will have trouble making ends meet in the coming year," Kobayashi said.

She said the two Council members seek to raise the $50,000 income ceiling set by the Council earlier this year and move up the timetable for relief, which was not due until fiscal 2008. "We're hearing from people who take money out of savings to pay the bill. I'm worried about people on a fixed income."

The bills would provide relief in fiscal 2007 to people who file petitions for the exemptions next year:

» If the combined income of all title holders did not exceed $75,000 in the previous year, the tax would be capped at 4 percent of the income. Sept. 30 would be the filing deadline.

» An owner would qualify for the one-time tax credit -- amount to be decided -- if the household income falls within federal median income limits, which differ according to household size. The May 1 filing deadline would make the credit available when tax bills are due in August. It would apply only if no one in the household owns other property.

» An owner could dedicate his property for his home use, effectively promising not to sell for 10 years. The increase in the assessed value of that residential property would not exceed the rise in the Consumer Price Index for Honolulu. Sept. 1 would be the application deadline.

"You're saying you will not sell it, as opposed to someone investing to sell, which raises prices," Kobayashi said. "If you sell, there would be some rollback taxes or penalty. But there would not be a penalty if the owner dies."

All three measures require that the homeowner lives on the property. A Jan. 23 public hearing is set for the bills.

Kobayashi said Council members are discussing the possibility of doubling the homeowner exemption -- now $40,000 -- which would apply to everyone. "Right now, we are trying to target savings for those who really need help," she said.

Mayor Mufi Hannemann has suggested giving homeowners age 62 and above a one-time tax credit of $200 beginning in February 2007. The administration is working on the details of that program.

ASSESSMENTS RISE ACROSS THE BOARD A look at Oahu real property assessments in 2005. Assessments: Sent to 273,550 property owners Total property valuation: $166.2 billion Total assessment increase: 25.9 percent Single-family homes increase: 27.8 percent Apartment valuations increase: 29 percent Hotel and resort property increase: 22.6 percent Commercial increase: 13.8 percent Industrial increase: 11.5 percent Projected increase in city revenues: $120 million Source: City and County of Honolulu