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How Hawai‘i County Assesses Real Property Taxes: What Every Property Owner Should Know and New Changes

Kai & Emil

Kai Ioh | Nov 2025 (Based on the 2025 Mass Appraisal Report)

Understanding how Hawai‘i County evaluates your property each year is one of the simplest ways to protect your investment – and avoid surprises on your annual tax bill. We sometimes call the County appraisal a “Black Box” due to its inconsistencies.  The County’s 2025 Mass Appraisal Report gives us an unusually clear look behind the curtain.

For homeowners, second-home buyers, investors, farmers, and long-term rental owners, the process continues to evolve. And some recent changes—especially for Agriculture and Long-Term Rentals—are important to keep on your radar.

Below is a friendly walkthrough of how the County actually values property, what trends they’re seeing, and how these assessments may affect your tax bill in the coming years.

 

1. The County Uses Mass Appraisal—Not Individual Appraisals

With over 141,000 taxable parcels, the County does not send a licensed appraiser to each home. Instead, they use a standardized mass appraisal system, which blends:

This process is designed to maintain uniformity across the island, so that similar homes in similar areas are assessed as fairly as possible.

Important: Assessments reflect value as of January 1 each year (January 1, 2025 for the current cycle). That means they capture the market conditions of the previous year, not today’s headlines.

2. How the County Determines Your Value

The County breaks every property into two pieces:

A. Land value

Calculated using market sales—not replacement costs.

B. Improvements (your home, ohana, garage, pool)

Calculated using the cost approach, adjusted for local market data and depreciation.

The County then calibrates these models using validated sales across the island. The goal is consistency: two homes with similar age, size, and neighborhood should have similar assessed values.

3. Aerial Imagery Is Now a Big Part of Valuation

One of the most interesting updates this year is the expanded use of EagleView/Pictometry aerial imagery.

These high-resolution aerial photos allow the County to identify:

Permitted or not.

If an unpermitted structure exists, the County will still assess it because it contributes value. Many owners don’t realize this until their taxable value suddenly jumps.

For some homeowners, this is a wake-up call. For others, it explains why their assessed value no longer matches their original permitted plans.

FYI, County Real Property Tax records showing an extra structure or extra bedroom do not mean it has a valid building permit. You will need to check the Planning and Building Department information to confirm the legality of the improvements.

4. Market Trends: A Slower, More Balanced Market

The County’s 2025 report shows a noticeable shift:

The County’s time-adjustment studies show that while values are still rising, the rate is more neutral than in the past three years. This means assessments will likely still increase in many neighborhoods—but not at the same speed we saw in 2021–2023.

5. Homeowners Continue to Benefit From the 3% Annual Cap

If you have filed for your Homeowners Exemption, your net taxable value cannot increase by more than 3% per year.

This is one of the strongest protections in the country, especially in a market where buyers from around the world compete for limited inventory.

If you recently bought a primary home, don’t forget to file your exemption by December 31.

6. Big Changes for Long-Term Rentals

Long-Term Rentals now have stricter documentation requirements:

The County plans to release a dedicated Long-Term Rental tax rate by June 20, 2026. Until then, properties remain in the standard Residential (non-owner-occupied) class.

This is one of the areas I’m watching closely, as it may influence investor strategies—especially in Kona and resort communities.  Real our newest blog post about long term rental tax change.

7. Major Agricultural Changes Affect Thousands of Landowners

Nearly 43,000 parcels are in Ag use programs, and the County has completely overhauled this system.

Key points:

This is one of the most impactful changes in years, along with the long-term rental. If you have an orchard, cattle pasture, coffee farm, or even a small diversified property, reviewing your classification is critical.

8. Why These Assessments Matter

As a property owner, understanding this system helps you:

We help clients review their assessments and exemptions before big decisions—especially around new purchases, remodels, agricultural filings, or moves between primary and second home status.

Final Thoughts

Hawai‘i’s real property tax system is unique: low rates, meaningful homeowner protections, and a growing emphasis on agriculture and housing policy.

The County’s 2025 Mass Appraisal Report provides a clear roadmap for how values are set and the trends they’re monitoring.

If you’d like a personalized review of your property’s tax classification—or you want to evaluate options for your ag land or long-term rental—our team is always happy to help.

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