The Honolulu Board of Realtors (HBR), the City Affairs Committee, and the Real Property Tax Division have collaborated to bring an exciting new feature to the City and County of Honolulu's Real Property website.
What’s New? There is now a NEW HEADER FIELD on the website that indicates whether a property has a DEDICATION. This update means you no longer have to scroll through multiple pages to find out if a property has a dedication, such as Agricultural, Historical, Long-Term Rental, or others. The dedication is clearly noted on the first page, right under the Assessment section.
How Will This Help?
This new feature will assist REALTORS® and the public in quickly identifying properties with dedications. It ensures that these dedications are properly disclosed and acknowledged in property transactions, which helps prevent potential issues down the road.
What is a Dedication of Real Property in Hawaii?
A dedication of real property refers to the process by which a property owner voluntarily sets aside or restricts the use of their land for a specific public or private purpose. Typically, this results in reduced property tax assessments. Dedications are commonly used for agricultural, conservation, or residential purposes.
Here’s a quick overview of the most common types of dedications:
- Agricultural Dedication: This dedication ensures land is used for farming or agricultural purposes, allowing the property owner to benefit from lower property tax assessments.
- Conservation Dedication: This helps preserve open spaces, forests, or environmentally sensitive areas, contributing to environmental conservation.
- Residential Use Dedication: This includes owner-occupied residences such as historical properties or long-term rental homes. It locks in lower property tax rates for specific residential use, ensuring stability in housing costs.
How Does it Work?
Property owners can apply for a dedication through the county tax office. Typically, dedications last between 5-10 years. During this time, the property must be used strictly for the designated purpose.
Important Note: If the use of the property changes (for example, from agricultural to residential), it would violate the terms of the dedication. The owner would then face tax penalties, which may include paying back taxes. Additionally, the property tax rate would revert to the original, non-dedicated rate. There would also be a rollback tax with a 10% penalty on the total amount owed.
These penalties could be significant and may lead to litigation if the dedication is not properly disclosed in a real property transaction.
Happy selling and buying!
Submitted by: Jody Libed