Homeowners say illegal vacation rentals are pushing up property taxes

Homeowners say illegal vacation rentals are pushing up property taxes

HONOLULU (HawaiiNewsNow) - Property tax assessments for Oahu residents are increasing more than 5 percent this year. But some homeowners who are seeing steeper increases are blaming illegal vacation rentals.

Haleiwa Realtor Erica Lehmkuhl said she was shocked when the city recently increased its assessment for her two-bedroom home by $200,000 this year to $959,200.

“I thought it was a mistake or a joke and I started looking at it closely and realized it was not," she said.

“It’s a nice house but it’s not a million-dollar home.”

Lehmkuhl said the city based its valuation partly on the resale of her neighbor’s home, which sold for nearly $900,000 last year. She said that home included an illegal vacation rental unit so the buyer paid much more for the house than market value.

But a city assessor she spoke with disagreed.

“He said that if my neighbors are participating in illegal activity and that drives the cost up of my house, that would not be a good reason for an appeal to be granted,” she said.

Lehmkuhl said she is considering appealing. Lawmakers said she is not alone.

“(Illegal vacation rentals) are not just taking the housing supply from the local market," said Honolulu City Councilwoman Kymberly Pine.

“We’re also finding that they are affecting property tax values and many homeowners are contacting us. They’re very concerned about being able to live in their houses forever."

The city declined comment on the situation.

However, it’s unlikely it could adjust for the values of illegal rentals in the appraisal system because it has no system for knowing where the illegals are.

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