Thousands of Hawaii County property owners claiming the homeowner’s exemption and agricultural land owners claiming they’re farmers will be hearing from the Real Property Tax Division over the coming months, as the county purges unqualified tax breaks from the rolls.
Real Property Tax Administrator Stan Sitko said Thursday that the first wave of letters will go out next month to property owners where the person claiming the homeowner’s exemption has moved or died. The letters will remind the property owner about the rules, such as they must use the home as their primary residence and can’t use the property for short-term rentals or as a non-home-based business if they want the tax break.
A recent comparison of property owners claiming the county homeowner’s exemption against vital statistics from the state Department of Health discovered 1,200 deceased people benefiting from the exemption, some for as long as 10 years. That’s cost the county untold thousands in lost taxes.
In addition, Sitko’s staff is currently reviewing 4,000 aerial images of agricultural land to see whether crops do indeed exist on the land where an agricultural exemption is claimed.
“If there is visible activity, we give them a pass at this time,” Sitko said.
If not, the tax assessor then does a site visit, and if crops still aren’t evident, a letter will be written to the landowners asking them to justify their exemptions. Those who don’t will be returned to the higher tax rate for the following tax year.
“We’re cleaning out those that aren’t there at all,” Sitko told the Real Property Tax Stakeholder’s Task Force on Thursday.
While the work is done in phases, it’s spread across the county to make it equitable, Sitko said.
The county is using Pictometry, a technology that provides aerial photographs, taken at an angle to provide views of both roof and exterior walls, to use for assessment analysis. The county is able to overlay parcel lines onto the images, as well as integrate another computer program which compares older images with newer ones, in its property reviews.
Sitko has been working on an agreement with the state Department of Taxation that would allow the two entities to share data about who is filing state income tax forms. Sitko said he doesn’t want to have anything to do with the contents of the tax forms, he just wants the state Tax Department to run their list of Hawaii County residents against his list of those claiming the homeowner’s exemption to scrub out the pretenders.
Property owners claiming the homeowner’s exemption get $40,000 of property value deducted from their assessment, thus lowering their tax. The deduction increases for seniors, the disabled and veterans. A property owner older than 70 gets a $100,000 exemption, with an additional $50,000 for disabled property owners.
In Hawaii County, about 40,000 property owners claim the homeowner’s exemption. To qualify, they must assert the property is their primary residence. The exemption automatically renews each year.
The oversight doesn’t rest entirely with the county. The Department of Health in 2005 quit sending vital statistics to the counties, thus hampering their efforts to purge their tax rolls. It wasn’t until last year, following a mandate from the state Legislature, that the data became available again, said county Finance Director Nancy Crawford.
Crawford said that surviving spouses, children and other residents on the property might have qualified for the exemption anyway. The exemption would have expired if the property had been sold.
Sitko said he recently ran a list of homeowners against the vital statistics and contacted a list of people over 100 years old. He was surprised at the result.
“It’s amazing how many of these people are still alive,” Sitko said.
Checking the homeowner’s exemption list against vital records and tax returns was one of 40 recommendations in a 99-page March 2012 report by the International Association of Assessing Officers. The task force was another of the recommendations.
