SUNSET BEACH, OAHU (HawaiiNewsNow) - Some Oahu residents say a new law meant to tax offshore real estate investors at a higher rate is hurting local homeowners and developers.
Sunset Beach resident Lucky Cole says he plans to appeal the city assessment for four of his vacation rental properties because it's discriminatory.
"It's clear from the administration that they are targeting a group of people who own property above $1 million who are second homeowners or investors," said Cole. "It's a political tax."
The two-year-old law taxes anyone who owns a second home worth $1 million or more at nearly double the rate of an owner of a home that's worth less than $1 million. A second home worth less than $1 million dollars is taxed at rate of $3.50 for every $1,000 of value. For those above the $1 million value, the rate is $6.00 for every $1,000 of value.
The higher rate is meant to curb speculation and raise money from mainland and Asian investors, who neither live here permanently or vote here.
But the soaring real estate market has pushed up property values so much that hundreds -- if not thousands -- of Oahu residents are getting the bigger tax bills.
"For those who have had properties like this for generations to see increased assessments on top of the additional rates, it's going to make it harder for these families to hold onto their properties," said Cole's attorney Ray Kamikawa. Kamikawa, a former state Tax Director, said the $1 million threshold is arbitrary.
"Number one, it's an illegal classification, number two it's unconstitutional and number three it's just downright unfair," Kamikawa said.
The challenges come a year after the city's Real Property Tax Advisory Commission took a close look at the new city tax. The seven-member commission, whose members included Cole and Kamikawa, recommended that the tax increases be more gradual. But the gradual tax approach appears to have little support in the City Council and Mayor Kirk Caldwell's administration.
We asked the city for comment but got no response. Homeowners have until Jan. 15 to challenge their assessments.