2017 Tax Reform is now law and it has created a stir... One result is a rush of individuals going to their State tax offices to pay their property taxes before the end of the year. The reason: the new tax law will limit deductibility of state taxes (income, sales and property taxes) to $10,000 per year.
Effect of tax reform on Hawaii
Our property tax rates are much lower than those of many other states. An average home on Oahu, for example might be worth $750,000 with annual property taxes around $3,000. Our state income tax rate for individuals earning in excess of $48,000 is 8.25% which is high compared to many states, though California, Oregon, New York State, Minnesota and Iowa's highest marginal rates surpass Hawaii's. For many Hawaii residents, paying the property tax bill (due February 20, 2018) will not significantly impact their taxes. At this time of year it's also difficult for some to come up with the extra cash to pay the bill two months ahead of schedule.
IRS Advisory regarding prepayment of taxes
The IRS wants taxpayers to know their property taxes must already be assessed in order for them to be tax deductible in 2017. The good news for Hawaii taxpayers is our property taxes were assessed in July! When the initial tax bill is mailed out, taxpayers have the option of paying half of the annual tax or all of it. Most choose to pay half the year's taxes (due by August 20, 2017) and pay the second half by February 20, 2018.
If you believe you will benefit by paying the second half 2017 taxes this year, rush to the tax office and pay the bill today or tomorrow! If you prefer to pay by check it should be okay if the letter is postmarked before the end of this year. Here's the address for City Hall:
City Hall (Honolulu Hale)
Division of Treasury
530 South King Street, Room 115
Honolulu, HI 96813
Satellite City Halls are NOT accepting property tax payments at this time (payments accepted January 20 to February 20).
Payment online by credit card is accepted (a processing fee is added) at hnlpay.com
Mike Bates (Realtor Associate)
Century 21 iProperties Hawaii
1585 Kapiolani Blvd #1533
Honolulu, HI 96814