Property tax breaks for long-term rentals

A. Dwelling units occupied as a long-term rental and under a signed contract to lease for twelve consecutive months or more to the same tenant, as of the date of assessment, by a natural person with no other place of residence, will be exempt only to the following extent from property taxes: 1. For tax years beginning on or after July 1, 2022: a. Totally exempt where the value of the property is not in excess of $200,000; or b. Where the value of the property is in excess of $200,000, the exemption will be in the amount of $200,000. B. Real property occupied as a long-term rental and under a signed contract to lease for six or more but less than twelve consecutive months to the same tenant, as of January 31, 2024, or January 1, 2025, by an individual who was directly displaced by the August 2023 Maui wildfires, will be exempt to the following extent from property taxes in the subsequent tax year: 1. For tax years beginning on July 1, 2024, and July 1, 2025: a. Totally exempt if the value of the property is not in excess of $300,000; or b. If the value of the property is in excess of $300,000, the exemption will be in the amount of $300,000. C. The provisions of subsection A are subject to the following conditions: 1. Long-term rental exemptions may be allowed on more than one home for any one taxpayer if the homes are located on different parcels. 2. If the property where a homeowner resides qualifies for a home exemption under section 3.48.450 , and a long-term rental exemption, for tax years beginning on or after July 1, 2023: a. The property is totally exempt if the value of the property is not in excess of $400,000; or b. If the value of the property is in excess of $400,000, the exemption will be in the amount of $100,000. 3. If a portion of the structure is used for commercial purposes, that portion of the structure will not be entitled to an exemption. 4. The exemption will not be allowed for any real property that is classified as "commercialized residential" or as a "TVR-STRH." 5. If the term of the lease is greater than one year, one year of exemption will be granted. After the initial year of the exemption, no exemption will be allowed unless the lease terminates after September 30 of any later assessment year. 6. If the long-term rental lease is granted to any of the following lessees, the exemption must not be allowed: a. A natural person who has an ownership interest in the property including natural persons who are considered as owners under section 3.48.150 . b. An officer or member of a corporation that has an ownership interest in the property. c. A partner in a partnership that has an ownership interest in the property. d. A business, corporation, partnership, or any entity other than a natural person. 7. If the tenant of the long-term lease maintains a permanent place of abode in addition to the dwelling unit, the exemption must not be allowed. D. Subsection B's provisions are subject to the following conditions: 1. Long-term rental exemptions may be allowed on more than one home for any one taxpayer if the homes are located on different parcels. 2. If the property where a homeowner resides qualifies for a home exemption under section 3.48.450 , and a long-term rental exemption, for tax years beginning on or after July 1, 2024: a. The property is totally exempt if the value of the property is not in excess of $400,000; or b. If the value of the property is in excess of $400,000, the exemption will be in the amount of $100,000. 3. If a portion of the premises is used for commercial purposes, that portion of the premises is not entitled to an exemption, but the portion used exclusively as a long-term rental will be entitled to an exemption. E. Upon proper application, a taxpayer will be entitled to a long-term rental exemption if the taxpayer provides the director a copy of the signed lease and all required documentation requested by the director in order to confirm the long-term rental occupation, including contact information for the renter as evidence of continued qualification for an exemption. Failure to respond to the director's demand in thirty days will be grounds for denial of a claim for an exemption. F. If the director obtains evidence that any use other than long-term rental use is occurring, such evidence will serve as prima facie proof that the individual does not qualify for a long-term rental exemption, and the director must provide written notice to the individual by mail that the individual does not qualify for an exemption or continued exemption under this section. Evidence may include homes that are being advertised for occupancy by transient tenants for periods of less than six consecutive months for any period during the course of any assessment year. G. If during the course of any tax year, the exemption of a property is revoked, the taxes for the entire tax year will be recalculated without the exemption. H. No long-term rental exemption will be allowed if taxes on the property are delinquent for more than one year. I. If, during the course of the assessment year, any portion of the dwelling is used as a transient vacation rental or short-term rental home, the exemption must be revoked and the taxes for the entire year recalculated without the exemption. J. The real property owner must report any change in use or occupancy of a property with a long-term rental exemption within thirty days of that change. The director may investigate any real property and, if the director determines that the actual use differs from a long-term rental, may reclassify and reassess the real property. K. As used in this section: "Directly displaced by the August 2023 Maui wildfires" means: 1. The leased property's occupant: a. Maintained a permanent place of abode within the red or yellow reentry zone in Lahaina, as established by the County in its reentry map of impacted areas, or a permanent place of abode for which access was restricted to certain hours by the government as of November 15, 2023; and b. Had no other permanent place of abode as of August 8, 2023; or 2. The leased property's occupant maintained a permanent place of abode that was destroyed, damaged, or impacted by the August 2023 Maui wildfires and had no other permanent place of abode as of August 8, 2023. "Permanent place of abode" means a dwelling unit maintained by the occupant, whether they own it or not, suitable for year-round use. L. The director may adopt rules and prescribe forms to implement this chapter. ( Ord. No. 5727 , § 4, 2024; Ord. No. 5582 , § 6, 2023; Ord. No. 5493 , § 4, 2022; Ord. No. 5404 , § 3, 2022; Ord. No. 5159 , § 7, 2020)