May 13, 2026, 8:30 a.m.
Historic County Building
To: Kaua’i County Council
Mel Rapozo, Chair
KipuKai Kuali’i, Vice Chair
From: Grassroot Institute of Hawaii
Jonathan Helton, Policy Analyst
RE: Bill 2991 — RELATING TO REAL PROPERTY TAX
Aloha Chair Rapozo, Vice Chair Kuali’i and other members of the Council,
The Grassroot Institute of Hawaii supports Bill 2991, Draft 1, which would create a tax credit for residents who purchase a home that is not in the owner-occupied or owner-occupied mixed-use tax classifications.
This measure would make homeownership more attainable for isle residents by lowering the tax penalties associated with buying a house that is classified at the time of sale as either vacation rental or non-owner occupied.
Right now, someone who purchases a home in one of those tax classes with the intention of living in it can apply for the county’s home exemption, but the property will not get taxed at the lower rate or receive the other tax benefits associated with the owner-occupied class until it gets reassessed and reclassified.
The higher tax bill the new owner pays until that happens can be significant. For example, a $1 million single-family home taxed as a vacation rental would carry an annual tax bill of $11,300 under current rates. The same home would be taxed at just $2,590 if it were classified as owner-occupied.[1]
Even if a purchaser who qualifies for a home exemption were to own the house for only six months of the tax year, that would still amount to $4,355 more paid in property taxes than they should pay.
This legislation seeks to resolve that issue by creating a tax credit homebuyers could receive after successfully demonstrating to the county that they are eligible for a home exemption.
The credit would be equal to the difference between what they paid in taxes on their home in its prior tax class and what they would have paid had it been classified as owner-occupied or owner-occupied mixed-use from the time they purchased it. It would be applied to the home’s tax bill for the following year.
If this legislation advances, Grassroot encourages the Council to make efforts to ensure that Realtors, banks, credit unions and other interested parties are aware of it.
Thank you again for the opportunity to testify.
Jonathan Helton
Policy Analyst
Grassroot Institute of Hawaii
1050 Bishop St. #508 | Honolulu, HI 96813 | 808-864-1776 | info@grassrootinstitute.org
[1] “Real Property Tax Rates for Tax Year July 1, 2025 to June 30, 2026,” Honolulu Department Of Budget And Fiscal Services, July 2025.
