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Kauai RE 101

Buyer or Seller, you’ll definitely find pertinent topics that will enhance your buying or selling experience. Check back often as I add more information.

Buyer’s market – What is it?

Everyone is saying it’s a buyers market… good for buyers, not so good for sellers accustomed to selling quickly at asking or close to asking prices. Just what is a buyers market and when does a market become a buyers market? A quick search on Google reveals the following definitions:

“A market condition which occurs in real estate where more homes are for sale than there are interested buyers.”

“Market conditions that favor buyers i.e. there are more sellers than buyers in the market. As a result buyers have ample choice of properties and may negotiate lower prices.”

“A period existing in the real estate market, whereas the number of available homes exceeds the number of buyers actively searching for a home. Such a condition could potentially favor the buyer because home sellers must remain flexible in their pricing and contract requirements in order to compete with the large volume of other home sellers.”

A buyer’s market is calculated based on past sales versus the number of properties currently on the market. For example, in Princeville as of 4-14-07, there are 142 condos on the market (not counting the 50 fractional shares.) As for sales, since 10/1/06 there were 56 sales, only 27 of which were resales. The other 29 sales were in the new Kai’ulani and Nihilani condo complexes.

Since most of the new sales were pre-sales that were initiated about 2 years ago, a clearer picture is provided by using on the true re-sales number for determining the market activity. With 29 sales over a 6 month period, that averages out to 4.8 or rounded up to 5 sales a month. At 5 sales a month, we have enough inventory for 28 months. Even if the new sales are included, with 56 sales that’s an average of 9.3 or 10 sales a month. Even at this “inflated” perspective, inventory exists for well over a year! Generally speaking, if the inventory is enough to supply demand for over 6 months, it is considered a buyer’s market

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Condhotel - What is it and why should you care?

Much like the name implies, a condhotel is a condominium that offers lodging to the general public like a hotel.  Unfortunately, if your agent is inexperienced or not familiar with condos, you may never run into this term until you go for financing, which is why I strongly recommend seeing a lender BEFORE writing an offer.  If you tell your lender which project you are considering, they will tell you if it is a Condhotel or not.  Why is this important to you?  A condhotel will cost you more money because a lender views a property open to the general public as carrying a greater risk than one that is totally privately owned.  The "cost" to you can be from one to two interests point higher and/or one point higher than the "going rate."  I also recently found out that one lender no longer offers any financing on jumbo loans for condhotels at all! 

There are several condo projects in Princeville: Hanalei Bay Resort, The Cliffs, and Alii Kai Phase II that may be considered condhotels by your lender.  Notice the word "may" as not all lenders view the condhotel criteria the same way.  While some lenders consider a complex a condhotel if it has a front desk, others look at the presence of maid service and commercial space as the condhotel criteria. 

If you are considering purchase of a condhotel, I strongly recommend that you contact several lenders with the name of the condo complex and see what they can do for you.  Some lenders are no longer offering "second home" loans on condhotels and will only finance it as an investment property.  As you probably know, an investment property has a higher interest rate than a primary residence or second home, and if it is a condhotel in addition it dramatically impacts the going rate.  As of today (12-27-07) one lender quoted 6.25% and 1.5 points on a conforming investment loan (under $625,500) while the same loan for a condhotel is 8.25% with the same points.  If your agent is experienced in condhotels, he or she should be able to refer you to lenders who work with condhotels. 

If you have any questions about any of the condo complexes on Kauai, do not hesitate to ask.  If I don't know the answer, I know the people who do--

Condo Maintenance fees – What do they include?

One of the first things I discuss with condo buyers are the maintenance fees, also referred to as HOA fees (Home Owners Association) or AOAO fees. (Association of Apartment Owners) All of these terms refer to a monthly fee charged to each condo owner for the management, insurance, upkeep, maintenance and future repairs (reserve funds) needed for the given complex. Typically, maintenance fees cover the following:
  • Administrative-General
  • Property Management
  • Professional Fees- Legal
  • Accounting Fees Audit
  • Common Area Electricity
  • Water & Sewer
  • Community Association Dues Supplies
  • Pool Service
  • Refuse Removal-General
  • Repairs/Maintenance-Building
  • Repairs/Maintenance-Plumbing
  • Repairs/Maintenance-Grounds
  • Repairs/Maintenance-Pool
  • Pest Control Taxes-General Excise
  • Real Property Tax on Grounds (Land)
  • Real Property Tax on “Structure”
  • Insurance-Package Fire, Hurricane, Liability

A few also cover electricity within the unit as well as cable TV.

Maintenance fees vary widely depending on the project but generally start around $400 month and go up. Buyer’s need to know this from the start in order to accurately determine their buying power.

In addition, they need to be aware that maintenance fees can and do increase over time. Many complexes on the Island faced increases this year caused by spiraling insurance costs due to the Hurricane damage suffered on the mainland. For example, the Cliff’s condo fees went up 15% as of the first of the year because of this – from apprx. $495 to $575.

No part of the fee is “profit” for the Association. Condo Associations are non-profit corporations set up to administer the building on behalf of the owners. The directors are almost always unpaid volunteer unit-owners. Larger projects will have a paid staff usually consisting of a licensed Community Association Manager and staff.
Outside of normal maintenance fees, a unit owner can be exposed to “Special Assessments” for large maintenance items for which adequate reserves do not exist as well as for updating and improving the property (”capital improvements”). This occurs less often but can happen.

Condo associations are required by State law to maintain a reserve fund to pay for anticipated future repairs, like repaving or reproofing. If funds are not available to pay for needed upgrades or repairs, then the Association will vote on a special assessment.

Although these fees may seem high, when you sit down and calculate the cost of all these items for a single family home: yard maintenance, property insurance, building upkeep and maintenance, pest control and management for a single family home, these numbers start to make sense.

Plus, in a condo you can be gone for extended trips or vacations and not have to worry if your gardener showed up this week ! All I have to do is show up and enjoy the view! If you have questions about the maintenance fees of any Princeville or Kauai condos, please do not hesitate to ask.


Conveyance Tax Facts - What you need to know

A conveyance tax, much like the name implies, is a tax paid to the state of Hawaii "for all transfers or conveyance of realty or any interest therein..." (Section 247.2 HRS)  When transferring property (home, condo or land) the seller will have to pay the following:

(A) $1.00 per $1000 for sales up to $600K,
(B) $2.00 per $1000 for sales from $600K up to $1M,
(C) $3.00 per $1000 for properties from $1M but less than $2M,
(D) $5.00 per  $1000 for properties from $2M but less than $4M,
(E) $7.00 per $1000 for sales from $4M but less than $6M,
(F)  $9.00 per $1000 for properties from $6M but less than $10M with $10.00 per $1000 of value reserved for sales $10M and over. 

These rates apply only to a home or condo that is being purchase as a primary residence.  If your buyer is an investor (i.e. ineligible for a county homeowner’s exemption on property tax) your tax rate will be as follows: (this does not apply to land)

(A) $1.50 per $1000 for properties less than $600K
(B) $2.50 per $1000 for properties from $600K, but less than $1M
(C) $4.00 per $1000 for properties from $M, but less than $2M
(D) $6.00 per $1000 for properties from $2M but less than $4M
(E) $8.50 per $1000 for properties from $4M but less than $6M
(F) $11.00 per $1000 for properties from $6M but less than $10M and
(G) $12.50 per $1000 for properties $10M and more.

In other words, if your buyer is ineligible for the country homeowner taxpayer exemption, if you are the seller, you end up paying more. 

So why should you know this?  Whether you are a buyer or seller, it’s important to know your expenses and the areas open to negotiation.  If you're an investor being asked to pay part of the conveyance tax, the increased rate for non owner occupied property may be why.  Even if you do not use this as a bargaining tool, you should be fully informed as to what your expenses will be upon the sale of your property!
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Looking for an affordable way to have a vacation home in paradise?  …without having to come over and spend half of your vacation time making repairs and doing routine maintenance because your property has been sitting vacant most of the year?  Fractional ownership may be for you.  Statistically, second / vacation homes are used approximately 20% of the time or 2 months making fractional ownership a perfect solution
With fractional ownership, which is typically a specific two month period, everything is set and ready to go upon your arrival.  Fractional ownership is usually priced based on the timeframe, with fractions that encompass Christmas and the summer season priced slightly higher than the other periods. 
A well planned fractional will have C,C & R’s (covenants, codes, and restrictions) that clearly explain what expected, permitted and required of each segment owner.  Since fractionalization cost approximately $25,000 for the attorney to draw up all the documents, you usually receive the documents for review upon opening escrow
You and 5 other “owners” pay a fee to a manager to make sure your property is kept in like new condition, plus, with occupancy year round, your home away from home is not left sitting collecting mildew. Fractional ownership is not for everyone, however, as it pretty much eliminates the personal touch that many homeowners enjoy. That is, you cannot come in and hang “your pictures” or paint the walls colors that you love since it is a shared property.
Most feel, however, the benefits outweigh the small disadvantages.  Most fractionalized properties are beautifully furnished, with high speed Internet access and oftentimes a car, if the property has a garage.  Each of the 6 owners pay a fee which includes their share of the Condo Homeowners Fee, Taxes and Insurance. In addition, an amount for a reserve fund and professional maintenance is included.  The reserve fund is set aside for capital improvements like new furnishings or a new car when it needed   If you have a car with the unit, you will share in the cost of insurance.  Although fractionalization is a relatively new concept, experts predict fractional sales will comprise 25% of the market in 5 years.  The majority of fractional are condo’s although some homes are also available. 
In the past, obtaining financing for fractional was rare to nonexistent, which meant you either had to take out a HELOC (Home Equity Line of Credit) on your primary residence or pay cash for your fractional. Not a good scenario. Fortunately, as more fractionals came on the market, other segments of the real estate field stepped up to meet the growing interest and there are now progressive lenders who see the value in fractionals and either finance your fractional purchase or meet with you to set up your fractional property as you get ready to go to market.  Call or email me for more information on fractional properties, lenders and attorneys.

Home Inspection – Choosing an inspector

The section of the Hawaii Purchase contract that concerns property inspections is section C-51 entitled ‘Inspection, Maintenance, and Warranties.” This section is a contingency which gives the buyer a specific number of days to conduct various inspections and / or research (permits, zoning etc) at the end of which the contingency is either removed with the sale moving forward or the buyer may opt to cancel the contract without penalty. (You will owe for the cost of the inspection which is typically deduced from your earnest money deposit prior to cancellation and return of your funds.)

It is strongly recommended that you hire a professional inspector familiar with Hawaii construction standards and problem associated with a tropical climate. The inspection cost is usually paid out of escrow and will run approximately $200 for a 1 bedroom condo and go up based on square footage and number of bedrooms in the property. It’s money well spent.

Contrary to what some buyers think, inspectors are not regulated or licensed by the State of Hawaii, therefore it is important to do your due diligence in choosing your inspector. Most real estate agents will provide a list of inspectors or you can find a list in the yellow pages or online.

How do you become an inspector? Some inspectors start out as general contractors while others obtain their education from the various professional schools offering training in the field. If an inspector says he is licensed or certified, find out what type of license it is and who provided the certification. At least three national organizations offer education and certification programs for home inspectors — the American Society of Home Inspectors, the National Association of Home Inspectors, and the National Association of Certified Home Inspectors. Each organization's Web site offers standards of practice and a code of ethics for its affiliated inspectors, and each allows you to search its database for a certified inspector. These are just a few of the many reputable associations providing education and certification.

To become an association affiliate, the inspector must pass a test to gain their certification. To maintain good standing as a member, continuing education is mandatory. If inspectors want to carry errors and omissions insurance, their carrier will require that they belong to an approved professional organization. Asking if they have e & o insurance and continuing education are good questions to ask you inspector, along with their level of experience, where they received their inspection training, and how many inspection they have conducted.

All legitimate inspectors welcome calls from potential buyers with questions as to their qualifications and scope of their inspection, which is another topic I have addressed in this section.

Home Inspection – Scope of the inspection.

Everything is NOT inspected!

I recently had a client point out to me during our final walk-through that the shut-off valves for the bathroom sink were frozen. The client was concerned since he’d had a property inspection and wondered why the inspector did not “catch this problem.” The answer, while simple is often misunderstood or overlooked, and that is, the Inspector DOES NOT INSPECT EVERYTHING and is not required to inspect everything per the Standards of Practice of their professional organization. The primary exclusions are often briefly summarized within the inspection report itself.

Unfortunately, most clients see only the details of the inspection itself and fail to notice these exclusions noted in each testing category. For example, under plumbing, the NAHI form states that “Supply valves below sinks and at toilets are not tested since they are prone to leakage. Typically many are frozen due to hard water or lack of usage.” It goes on to say “It is outside the scope of this inspection to check overflows in sinks and bathtubs.”

Basically, Inspectors do not inspect items that are hard to reach (i.e. they will not move a large piece of furniture to check an electrical outlet) items that are concealed or are not readily accessible, move or lift floor coverings, ceiling panels or window coverings or perform any test or procedure that could damage the item being evaluated. The case of the frozen shutoff values is a good example of the last situation. If the inspector checks the values and causes them to start leaking in the process then it is his expense to repair them.

If your inspector is affiliated with a professional organization, check the “Standard of Practice” found on the organization website to clearly understand what is checked, how it is tested, and what the exclusions are. You can go to www.ashi.org, www.nahi.org or www.nachi.org (to name just a few of the many professional organizations) to view their Standard of Practice.

Can a home fail a property inspection? The simple answer is NO. A professional home inspection is an examination of the current condition of a house. It is not an appraisal, which determines market value. It is not a municipal inspection, which verifies local code compliance. A home inspector, therefore, will not pass or fail a house, but rather describe its physical condition and indicate what components and systems may need major repair or replacement. Please place the emphasis on “major repair or replacement.”

No house is perfect and most homes are in need of some repair, however minor, usually due by normal wear and tear. If the inspector identifies problems, it doesn’t mean you should or shouldn’t buy the house, only that you will know in advance what to expect. If major problems are found, a seller may agree to make repairs.

Some Sellers obtain a property inspection in advance of listing giving them the opportunity to make repairs that will put the house in better selling condition. Having a property inspection available at the time of a showing often alleviates the buyer’s concerns about the property condition and can make for a smoother escrow.

Whether you are a buyer or a seller, be aware of the scope of the inspection. For inspection of the components not addressed by your inspector, you may wish to call in a professional in that area, i.e. a plumber or an electrician, if there are areas of concern.



MLS - Did you know there are Two MLS websites?

Public and Professional?
MLS is an abbreviation that stands for “Multiple Listing Service”. Hawaii Information is the company that provides Kauai with the Multiple Listing Service. This service is a computerized database of all real estate property (homes, land, condos. Businesses etc) listed for sale by brokers on Kauai.

“Listing” a property simply refers to the act of entering a property for sale onto the MLS. This is done by the seller’s real estate agent. On Kauai, over 500 agents have access to the MLS on a daily basis to find property for their buyers, making it the number one resource to locate property. As a seller, your property cannot be on the MLS unless you are working with a licensed real estate agent and have signed a “listing agreement.” Owners who try to save money by selling their property themselves (known as FSBO’s or “for sale by owners”) usually find that lack of exposure limits their ability to sell, often leading to them eventually “listing” with an agent.

What you may not realize is that there are two versions of the MLS; the public MLS and the private or professional MLS. If you have done any search for property on the internet, you have probably seen the public MLS. This website provides general details about the property such a bedrooms, baths, size and provides a picture, but does not tell you how many day the property has been on the market, if it has been in escrow, when the seller purchased the property etc.

The private or professional MLS is only available to licensed real estate agent who pay a monthly fee to access the site. The information provided on the Professional website is extensive and is extremely helpful to buyers when researching properties of interest. Some of the additional information available only to agents includes extra photos, private comments from the seller’s agent, seller’s original purchase price and date of purchase, property tax, Homeowners fees (if applicable), original list price, if there have been any price increases or reductions, if the property was previously listed with another agent, just to name a few. All of this is critical to a buyer’s ability to negotiate effectively.

The obvious question then is- how do you, as a buyer, gain access to this information? The answer is simple, by working with an agent. Many buyer’s are unaware of the existence of this information, and sometimes reject an agent’s offer of assistance, feeling they can find ample information on the various MLS websites. (MLS, for a fee, allows any website to have full listing information on that website, as I have done here on my website.)

It is my goal to educate you BEFORE you buy so you can negotiate the best price for the property. As an Accredited Buyer’s representative, (ABR) I take my fiduciary responsibility very seriously and do my best to inform and educate my clients.

If you are thinking of buying, and feel that working alone is the best way, please take a moment to call or email me an MLS number. I will email you back all the information that is REALLY available on that property- not just what you can see on the MLS. It costs you, the buyer, nothing to work with an agent (seller’s compensate buyer’s agents through the commission they pay to their listing agent. It is split between the listing and the buyer’s agent) so you have nothing but MONEY to lose if you do not have all the facts.

My job is to work for you! All I ask is that when you purchase your property, you allow me to represent you in the purchase otherwise I am not compensated for my efforts. If you have any questions on the MLS and the buying process, do not hesitate to call or email me. I am here for YOU.



Property Value – Why it changes with the market

Thinking about selling? Wondering what you home might be worth? The value of your home changes with the market. In a robust market where inventory cannot keep up with demand, known as a seller’s market, a buyer will perceive your home as having more value and will pay more money to ensure they obtain the property before someone else does. Oftentimes, in a seller’s market, bidding wars will ensue with several buyer’s trying to outbid one another with the goal of having the ‘winning’ offer. What this means to you is a higher sales price.

Conversely, in a market with an abundance of inventory, where buyers can pick and choose, your home will not have as much value. This is known as a buyer’s market. In a buyer’s market, a buyer will typically offer less than your list price, feeling that if you don’t want to sell your home, they will move on to another seller who is more motivated. This is very difficult for sellers to accept, but it is important to know what “market” you are in prior to listing your property for sale. Be prepared in a buyer’s market to accept less than asking and understand that the ability to be flexible and negotiate are key elements of this type of market.



Real Estate Agent – Part 1 - Questions to ask before hiring one.

There are a few basic questions to ask your realtor. These are:
1. How long have you been in the business?
2. Are you a Realtor?
3. What is your specialty?
4. Can I have a list of past customers?
5. Who is your Broker? Can I call him/her?
6. How many sales did you complete last year?
7. Is this your full-time job?

In addition to these basic questions I would also ask:
1) How long have you lived on Kauai? (or Hawaii or..)
If you’ve spent any time at all in the Islands, you know this is a very transient place, compared to the mainland. I started out in Ohio and thought California was transient by comparison but Hawaii makes California look downright stable! People tend to come and go here, some from one Island to another but most come from the mainland to make Hawaii their new home. Find out if they’ve just arrived and know little more than you or if they’ve had time to become familiar with their area.

2) What professional designations do you have?
It may surprise you to learn that to be licensed in Hawaii, you need to successfully complete a 45-hour prelicensing education course and be 18 years of age by the examination date and a United States citizen or national or alien authorized to work in the United States. After passing the prelicensing course, you have two years to pass the State salesperson’s examination and then another two years in which to actually apply for the license. To receive an active license, you must be employed or associated with a licensed real estate broker. Once licensed all agents must attend ten hours of continuing education courses every two years before renewing their license.

When you get right down to it, that’s not much, which is why I am such a strong proponent of professional designations. Education abounds for the agent seeking it and is typically associated with a professional designation like GRI, (Graduate Realtor Institute) ABR (Accredited Buyers Representative) and CRS (Certified Residential Specialist) to name a few. Education does not necessarily make you a good agent but it does show your degree of commitment to your chosen profession.

3) Do you have a website?
Statistics from the National Associated of Realtors puts the percentage of buyers who first look online prior to purchasing at 70% +-. Statistics like that tell the whole story from my point of view. As a client, whether buyer or seller, you want exposure — look for an agent with a well placed website.

The final 4 questions I would ask are presenting in part 2..



Real estate agent – Part 2 More questions to ask.

These are 4 additional questions I would ask my prospective agent:

1) Does your website have the entire MLS on it?
Any agent can coordinate with their local MLS service provider to have the entire MLS on their website. If you are a seller, you want buyers to come to your agent’s website for greater exposure of your property. Most agents have a separate listing section where only their listings are presented, usually called “Featured listings.” When buyers click here, they will see your property before seeing everything else on the market. If you are a buyer, you want a website where you can see the entire MLS at one place.

2) Can you scan in and fax or email a purchase contract, listing contract or any other document to me?
Ease and clarity of the transaction are critical to busy clients, especially if you are on the mainland in a different time zone with the typical busy life. Even conventional faxing is falling by the wayside, replaced instead by faxing over the internet which enables an agent to both receive faxes from a conventional fax machine into their computer or to scan in a document to their computer and fax it to a conventional fax machine.

One advantage of internet faxing I have found, besides the obvious that you can send and receive faxes from just about any computer, is that the fax comes through with less distortion and greater clarity using internet faxing. Don’t ask me why- I don’t know how the technology works, just that it does.

3) How will you keep me informed and how often will I hear from you?
This is a good question in today’s market where we are seeing longer market time for properties. It used to be that you’d put a property on the MLS and contact with your client was a natural result of giving feedback for the many showings. Not so anymore. Will your agent keep you informed as to what, if any, market activity is taking place in your area? This is helpful for both buyers and sellers.

4) How many listings do you currently have?
If you need more of a personal one and one touch, you may not want the agent who has so many listings that they work on a team concept; that is, someone who handles the listings, someone else who handles the escrow, and yet another team member who communicates with current clients, leaving the agent free to generate new business. There’s nothing wrong with this business model, if you don’t mind talking to several different people over the course of buying or selling property. It’s very efficient but may lack the personal touch. Don’t forget to ask this important question and find out how much time the agent has to devote to your buying or selling effort.

Of course, none of the above guarantees a good agent, and nothing should dissuade you from using a new agent if they have the time, ability and backup to assist you in achieving your real estate goals. New agents often have more time to devote to you as they usually have fewer clients starting out.

The most important question is, do you feel comfortable with the agent? If the answer is yes, then give that agent a chance, whether old or new, to work for you! Ask the other questions, but remember, your intuition is often right on the mark! Hope this helps in choosing your real estate agent for your next transaction.


Taxes - How are they computed?

One of the most common questions I am asked is how property taxes are figured. Since many of our buyers are from CA, where the sale of property triggers a re-assessment at the new sales price, they usually ask if taxes will go up after they purchase. Taxes may go up but not due to the sale at that time.

Property is assessed at market value, based on values established by the County of Kauai Real Property Assessment Division.  The date of valuation was changed from January 1st to October 1st.  For 2013, the assessment are as of October 1, 2012.

Due to the shortage of assessors, a personal inspection of your property is usually only undertaken at the time of construction or remodeling. After that, the "Mass Appraisal Method of Valuation" is applied. In a rapidly appreciating market, like the seller's market of 2005-2006, appraisals went up every year while in the present buyer's market, you may see some properties advertised as being "below appraised value." If you do buy a property like this, find out if the seller is referring to the Real Property Tax appraisal or an appraisal done by a private appraiser for a loan. If your County appraised value is more than what you paid for your property, you can file an appeal with the County.

The appraised value consists of a single value.  Once the valuation is established, it is multiplied by the appropriate tax rate unless there is an exemption to the assessment amount.

An exemption is an amount deducted from the appraised value. The most common exemption is the homeowner’s exemption which allows for a $48,000 deduction from the appraised value for owner occupied properties. Other exemptions typically based on age or income may also be available. The deadline for filing exemptions is September 30th. These are all the exemptions as stated on the Kauai county Government website:

BASIC HOME EXEMPTION – Homeowners not 60 years of age will be eligible for a single home exemption of $48,000.
  • MULTIPLE HOME EXEMPTION – This exemption was established to help senior citizens living on fixed retirement incomes. Homeowners between the ages of 60 and 69 are eligible for two times the basic home exemption or $96,000. For homeowners 70 years and older, the multiple home exemption is two and a half times the basic home exemption or $120,000. 
  • TOTALLY DISABLED VETERAN EXEMPTION – If you are a totally disabled vet—due to injuries received while on active duty with the U.S. Armed Forces, your home is exempted from all real property taxes, except the minimum tax of $25.00.
  • ADDITIONAL HOME EXEMPTION BASED ON INCOME – Real Property which qualifies for the Basic Home Exemption, Multiple Home Exemption of Totally Disabled Veteran Exemption shall be entitled to an additional exemption of up to $55,000 provided the annual adjusted gross income of the owner-occupant is less than $40,000. You shall apply annually for this exemption.
  • DISABILITY EXEMPTION – Special exemptions of up to $50,000 are also available for property owners who are totally disabled, blind, deaf, or who are Hansen’s Disease sufferers. This special exemption is in addition to the basic and multiple home exemptions.
You can find all this information here.

After the assessment of the property has been made, and any exemptions subtracted, what remains is the net taxable value. This is the starting point for the calculation of taxes.

Each year, as part of the Budget, the County Council sets the tax rates for each of the 8 classes of property. The classes are: Homestead, Residential, Vacation Rental, Hotel and Resort, Commercial, Industrial, Agriculture, and Conservation. Other than Homestead, the classes are based on the property’s actual use, while assessed value is at "highest and best use."

The Homestead class consists of properties which are used only as the owner’s principle residence, no matter what the zoning is. Owner-occupied farms are also included in the Homestead class.

The tax rate is the amount of taxes on the property for each $1,000 of net taxable value. For example, if the tax rate is $8.00 and the net taxable value is $100,000, the taxes would be $800.00.

The first tax period runs from July 1 to Dec 31, with payment due no later than Aug 20. The 2nd installment for the period Jan 1 to June 30 is due February 20. To make any inquiry you need your taxkey number, which is the 5 or 6 digit number associated with your parcel of land. For specific tax questions about your property, the number for the Real Property Assessment Division in Lihue is 808 241 6222.

Taxkey numbers -What are they and how can they help you?

Perhaps you've seen them on the Multiple Listing Service-- a 5 or 6 digit number separated by dashes. Have you ever wondered what that number is? Every piece of property in the entire State is identified by a unique number known as the taxkey number. If you know what area the numbers represent, you can readily identify the general location of any property at a glance.

The first number identifies the Island: Oahu is alway 1, Maui 2, Hawaii (the Big Island) 3 and Kauai is 4. After the first number identifying the Island, the second number is the "zone." Kauai is divided into 5 zones as follows: 1) Waimea, 2) Koloa, 3) Lihue, 4) Kawaihau and 5) Hanalei. Please note that these zones encompass larger areas. For example, you may see a property in the Hanalei zone and erroneously think the property is in Hanalei town, when in fact it could be in Kilauea or Wainiha.

The third number is a Section in the Zone. They are as follows:

Zone 1 - Waimea
1. Niihau
2 & 3. Kekaha / Mana
4. Kokee
5 & 6. Waimea
7. Kaumakani / Makaweli
8. Hanapepe

Zone 2 - Koloa
1. Eleele
2. McBryde
3 & 4. Kalaheo
5. Lawai
6. Poipu
7. Omao
8 & 9. Koloa

Zone 3- Lihue
1. Puhi
2. Lihue / Nawiliwili
3. Lihue / Kukui Grove
4. Lihue
5. Kalapaki / Nawiliwili
6. Lihue
7 & 8. Hanamaulu
8. Wailua

Zone 4 - Kawaihau
1. Wailua Houselots
2. Wailua Homesteads
3. Wailua / Waipouli
4. Wailua Homesteads
5. Kapaa
6. Kapaa Homesteads
7. Kealia
8. Anahola
9) Aliomanu

Zone 5 - Hanalei
1 & 2. Kilauea
3. Anini
4. Princeville
5. Hanalei Valley
6 & 7. Hanalei
8. Wainiha
9. Haena

The fourth and fifth number refer to the Plat and Parcel which together give the exact location of the individual property. Fox example, if the number were 4-5-4-9-57 you would know at a glance it is a property on Kauai, (4) in the Hanalei Zone (5) somewhere in the Princeville Section(4). If you have a detailed "taxkey map" you would be locate the Plat (9) and Parcel (57) to pinpoint the property location with only the taxkey number. Sometimes you will see a six digit taxkey number which means the property was divided. When the process of dividing the land is complete, the taxkey number will take on a final number to differentiate one parcel from another.

Here is a copy of the taxkey map showing generally where the Zones and Sections are located.

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Elaine Schaefer Realtor (B), GRI, CRS, ABR, SFR, SRS
Broker in Charge - Princeville Resort Office
Email: soldonkauai@gmail.com
Cell: 808 639 2935
Home Fax: 1 808 440 4552

Blog: Visit My Blog

Princeville Resort Office
POB 223632
Princeville, HI 96722
  Copyright Elaine Schaefer. All rights reserved.
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