Kauai Tax Assessment Appeal

TAX ASSESSMENT APPEALS….NOT ALL ARE CREATED EQUAL!

By Carol C. Cummings R/CRS/GRI/SRES Kauai Realty, Inc.

As prices on Kauai have been “adjusting” down during the past couple of years, today’s County of Kauai real property assessments now far exceed the asking price for many listings currently on the market. According to the http://www.kauai.gov/ website, in a message to the public, Mayor Baptiste explains that, unlike in the past, today’s property is assessed at full market value:

The need to insure “truth in taxation” has brought about a major change in the way property has been assessed beginning in 1983. Property is now being assessed at 100% of fee simple market value, making it easier for homeowners to see what their property is actually worth. Assessing at full market value eliminates the mathematical calculations and guesswork of the past.”

In the same web page entitled “Understanding your Real Property Taxes”, the Mayor also acknowledges the appraisal system is mass produced, not individually prepared, mainly because of lack of staff:

Because our County has only a few appraisers for approximately 28,000 taxable parcels and 27,000 structures, a personal inspection of your property is normally undertaken only at the time of construction or remodeling. The “Mass Appraisal Method of Valuation” is used thereafter, but your property is still given individual consideration. A computer is used to update your property value through a land and building indexing system.”

This revelation led me to research the Real Property Assessment Appeals process in the 4 counties throughout the 50^th state:

Assessment mailings and appeal deadlines.
It appears that all counties have “Real Property Tax Review Boards”, appointed by the Mayors, confirmed by the county councils, who hear the taxpayers’ appeals. The City and County of Honolulu mails the assessment notices on December 15^th, and gives the taxpayers 31 days, until January 15^th to file an appeal. Meanwhile the other 3 counties mail their assessments out by March 15^th, and allow their tax payers about 3 weeks, until April 9^th to file an appeal.

Cost of filing an appeal.
In this category, Kauai taxpayers appear to have the advantage. An appeal on the Garden Island costs the applicant $10.00, while Maui and the Big Island require a $15.00 deposit. On Oahu, $25.00 is collected for each appeal.

All counties allow the taxpayer to further appeal their denied request to the State Tax Appeal Court, at the sole cost of the taxpayer.

Grounds for Appeal.
Again the counties have very similar policies regarding grounds for appeal. Grounds include lack of uniformity or equality, denial of exemption, illegality of ordinance or methods used, and actual assessed value of the Property. There was one glaring difference for those taxpayers contesting the assessed valuation in the various counties: On Oahu, Mr. Taxpayer needs to show his property was over assessed by at least 10% to win his appeal. On Hawaii and Maui, no minimum over assessment is stated, so it is assumed the taxpayer may be able to win an adjustment so long it is justified.

However, on Kaua`i, the taxpayer must provide data to prove that his/her property was over assessed by County appraisers by more than 20%. For example, if your property is currently assessed by the County for $480,000, and you have supporting data to show its market value at only $400,000, save yourself $10.00 & don’t file the appeal. In this case, the County has the right to over assess your Property, and you will pay taxes based on that additional $80,000 value!

Method of Appraisal.
Be aware when appealing the assessment of vacant land, that current policies allow the County to establish the value of your vacant lot using the “land value” of residential property. Why is this important?

If a residential property is valued at $500,000 by the County ($300,000 for the land & $200,000 for the structure), but a more realistic value is $200,000 for the land and $300,000 for the Building, the county is still allowed to use the $300,000 value assigned to the land as a “comparable” value for a similar vacant lot.

Sifting through the Real Property Tax Process.
Here are some suggestions to guide you through the property tax appeals process..

In a declining market, we may realize the shortcomings of mass assessments of what is believed to be 100% of current market value. If present trends continue, the number of appeals received and processed by the County will dramatically increase. At the same time, Mr. Taxpayer may become a victim of the “20%” rule. As always, there is the possibility of real property tax reform, but until such reform happens, it pays to be an informed Kaua`I property owner!

Information for this article obtained by author from public websites of Counties of Honolulu, Hawaii, Maui, & Kauai, and is deemed reliable, but not guaranteed.