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Look I understand the need to break even on rentals and make a little profit
Funny. So someone should spend $500,000+ (or much much more) and break even - right, socialism is for you. The entire rental market in the US would fall apart if landlords didn't get as good or better return than US equity markets.
Last I checked - tenants aren't forced to rent a property.
Buying 10 purses in one month sounds quite greedy. And it drives up the cost of purses for the rest of us.
If there weren't all these greedy purselords out there, a Hermes Birkin Bag wouldn't cost $11,000 !!!
You're so wrong. Housing is a necessity and purses are a luxury. Don't even compare the two. Hermes Birkin Bags are priced as to value and which I won't ever buy anyway but it's a desire and does not mean I need it.
Ten purses in one month is not quite greedy. It's no different from someone buying 10 different golf clubs or whatever.
How in the world did this get to purses from a greedy landlord?
Did I ever say I couldn't afford my purses? I can afford it. My problem with this landlord is the level of greed that he/she exhibits. Give me a break. Half a house at 2100 dollars? I stand by what I said. I know about property taxes they are very low in Hawaii. It's pure greed and it's people like them who drive up the costs. Maybe when the military scales back in Hawaii and Hawaii is left with a glut of properties then rents will go down.
Like most people, you are incorrect about property taxes being low here.
We are ranked number 5 in the nation with the highest property taxes paid -
States with the highest average property taxes in dollars for single family homes were New York ($15,625), New Jersey ($8,108), New Hampshire ($5,795), Connecticut ($5,646), and Hawaii ($5,024).
States with the lowest average property taxes in dollars for single family homes were Alabama ($618), West Virginia ($931), New Mexico ($1,096), Tennessee ($1,116) and Indiana ($1,418).
People in Hawaii pay nearly DOUBLE the national average for property taxes on single family homes. The reason why you hear a lot of people say our property taxes are low here are because they are focusing on the rate rather than what they are actually paying in dollars. It's often the same math-challenged people that think the GET at 4.5% is "super cheap" compared to the sales tax in other states.
Further, since the landlord is renting a duplex unit or "half a house" and he is clearly not living in the other half, he would have to pay the non-owner occupant real property tax rate. Assuming the duplex is assessed at $1.2M (low and conservative assessment of $600K per "half a house"), the landlord is paying $7,200 in property taxes annually or $600/mo. That's a far cry from "very low".
People in Hawaii pay nearly DOUBLE the national average for property taxes on single family homes. The reason why you hear a lot of people say our property taxes are low here are because they are focusing on the rate rather than what they are actually paying in dollars.
Emphasis on average
Let's keep this real for the audience.
On Oahu, if you reside in your home - you'll be living in a $1,500,000 home to pay roughly the $5,000 "average" quoted in the article. Think about how the super high end homes skew the "average". Nobody should feel sorry for those paying $5,000/year (that same $1,500,000 home in California would be over $15,000/year). This high end homes all over the island make "average" meaningless.
Median is always much better than average. If you live in the median home on Oahu, roughly $800,000 - after you take the home exemption, you'll be paying about $2,500/year (that means half pay less than that), which is ridiculously low compared to the rest of the US. (That same $800,000 home in California is over $8,000/year)
On Oahu, if you reside in your home - you'll be living in a $1,500,000 home to pay roughly the $5,000 "average" quoted in the article. Think about how the super high end homes skew the "average". Nobody should feel sorry for those paying $5,000/year (that same $1,500,000 home in California would be over $15,000/year). This high end homes all over the island make "average" meaningless.
Median is always much better than average. If you live in the median home on Oahu, roughly $800,000 - after you take the home exemption, you'll be paying about $2,500/year (that means half pay less than that), which is ridiculously low compared to the rest of the US. (That same $800,000 home in California is over $8,000/year)
Most studies on property taxes take into account averages - not medians. It gives a clearer picture on what the government takes in (overall) in property taxes. If median figures were provided, there would be no way to determine what the government is raking in.
Also, the non-owner occupant (i.e. ALL rental property) rate is 0.6% (not 0.35%) for all of the following properties on Oahu -
1) Any single family home worth $1M or more
2) Any condo unit worth $1M or more
3) Any two separate detached single family homes on a single parcel (so two $500K homes on one lot qualify for the .6% rate)
4) Any duplex valued at $1M or more
It's pretty much impossible to find a habitable duplex on Oahu worth less than $1M. And completely impossible to find a property with two legal single family homes on it worth less than $500K each. And homes valued at more than $1M represent about 90% of all the homes in East Honolulu now. So we're talking quite a few rental properties on the island taxed at the 0.6% rate; this brings up the "average" quite a bit.
The average property tax in California is 0.81%. But once you do the math (which you never do), you'll see that the burden on the landlord can be higher here.
Same $1.2M duplex rented in California vs Oahu at $5,000/mo ($2,500 each unit):
California -
$1.2M x .81% = $9,720 annual property taxes
+ sales tax (zero) or GET (zero) = 0
Total liability to California landlord - $9,720
Oahu
$1.2M x .60 = $7,200 annual property taxes
+ 4.5% GET or $60,000 (annual rent) = $2,700 annual GET
Total liability to Oahu landlord - $9,900
So as you can see, the OVERALL tax liability to the landlord after taking into account a tax that is not even applicable in California is higher on Oahu. The same scenario would apply to all four property types noted above.
It's much better to paint the whole picture instead of leaving important details out.
Most studies on property taxes take into account averages - not medians. It gives a clearer picture on what the government takes in (overall) in property taxes. If median figures were provided, there would be no way to determine what the government is raking in.
Also, the non-owner occupant (i.e. ALL rental property) rate is 0.6% (not 0.35%) for all of the following properties on Oahu -
1) Any single family home worth $1M or more
2) Any condo unit worth $1M or more
3) Any two separate detached single family homes on a single parcel (so two $500K homes on one lot qualify for the .6% rate)
4) Any duplex valued at $1M or more
It's pretty much impossible to find a habitable duplex on Oahu worth less than $1M. And completely impossible to find a property with two legal single family homes on it worth less than $500K each. And homes valued at more than $1M represent about 90% of all the homes in East Honolulu now. So we're talking quite a few rental properties on the island taxed at the 0.6% rate; this brings up the "average" quite a bit.
The average property tax in California is 0.81%. But once you do the math (which you never do), you'll see that the burden on the landlord can be higher here.
Same $1.2M duplex rented in California vs Oahu at $5,000/mo ($2,500 each unit):
California -
$1.2M x .81% = $9,720 annual property taxes
+ sales tax (zero) or GET (zero) = 0
Total liability to California landlord - $9,720
Oahu
$1.2M x .60 = $7,200 annual property taxes
+ 4.5% GET or $60,000 (annual rent) = $2,700 annual GET
Total liability to Oahu landlord - $9,900
So as you can see, the OVERALL tax liability to the landlord after taking into account a tax that is not even applicable in California is higher on Oahu. The same scenario would apply to all four property types noted above.
My discussion isn't about what the government is taking in - it is about what most people in property tax.
On Oahu, most people pay less than $2,500/year in property taxes - and that is just single family homes. Once you factor in condos, it is the vast majority pay less than that - again, ridiculously low.
GET isn't property tax. GET is the cost a landlord needs to factor in to determine rent. Just like any other cost. And to not confuse people who don't live here, you don't pay GET on a home you live in.
.81% in California - I would be thrilled to pay that on my San Francisco condo. Try over 1.1%. And a $1,000,000 condo in Honolulu is more than double that in San Francisco, so you want to throw GET into the mix, think about that for a minute. That $1,000,000 place in Honolulu pays around $3,200 (still far less than "average") and even if you find a micro-condo in SF for $1,000,000 - you pay over $10,000/year in property taxes.
You can play averages all you want, but the fact is, the vast majority of homeowners on Oahu pay less than $2,500/year in property taxes and even with todays rising real estate, nobody needs to feel sorry for anyone paying $5,000/year on Oahu, that is double what most people pay and gets you a decent home in even the most desirable neighborhoods with very few exceptions.
So to suggest $5,000 is the benchmark for Oahu just isn't suggestive of reality. Shoot, I pay over $5,000/year on the majority of my properties and nobody would pull into the driveway and find them "average" of reality on the island.
Last edited by whtviper1; 03-03-2016 at 12:24 PM..
My discussion isn't about what the government is taking in - it is about what most people in property tax.
On Oahu, most people pay less than $2,500/year in property taxes - and that is just single family homes. Once you factor in condos, it is the vast majority pay less than that - again, ridiculously low.
GET isn't property tax. GET is the cost a landlord needs to factor in to determine rent. Just like any other cost. And to not confuse people who don't live here, you don't pay GET on a home you live in.
.81% in California - I would be thrilled to pay that on my San Francisco condo. Try over 1.1%. And a $1,000,000 condo in Honolulu is more than double that in San Francisco, so you want to throw GET into the mix, think about that for a minute. That $1,000,000 place in Honolulu pays around $3,200 (still far less than "average") and even if you find a micro-condo in SF for $1,000,000 - you pay over $10,000/year in property taxes.
You can play averages all you want, but the fact is, the vast majority of homeowners on Oahu pay less than $2,500/year in property taxes and even with todays rising real estate, nobody needs to feel sorry for anyone paying $5,000/year on Oahu, that is double what most people pay and gets you a decent home in even the most desirable neighborhoods with very few exceptions.
So to suggest $5,000 is the benchmark for Oahu just isn't suggestive of reality. Shoot, I pay over $5,000/year on the majority of my properties and nobody would pull into the driveway and find them "average" of reality on the island.
My discussion is about rental property (not owner-occupied property); this thread is about an eviction and contributing members have brought up concerns about high rent and landlord "greed". We are discussing the cost of landlording - not the cost of home ownership exclusive to those that occupy their own home. You should start another thread about low property taxes for owner-occupants.
I'm a little bit more pragmatic in my analysis and take on what I pay in taxes as a landlord. I don't look at just the rate, or the particular tax "label"... I actually look at the global tax liability (dollars paid) on whatever it is I owe taxes on. In this case, I look at what my TOTAL tax liability is to the government (state + city) for renting a property to a tenant.
What you fail to recognize is GET covers the cost of public services that are conventionally paid for by real property taxes in every other state. So here in Hawaii, instead of this public service expense being covered by revenues generated by real property taxes, it comes out of GET. And GET is paid for by the landlord. A very large portion of property taxes paid in California fund public education. Absolutely zilch of our Dept of Education budget is funded by real property taxes - it all comes from GET. GET collections represent nearly HALF of all tax revenue collected by the state. I could take the argument even further and go into state income taxes (of which we pay more than any other state in the country) but I am going with the assumption the landlord is not actually profiting off the tenant therefore no state income taxes are applicable. If an Oahu landlord is fortunate enough to be profitable on their rental property, they would be paying more in state income taxes on that rental income than any other state.
You completely dismissed my brief analysis depicting real world numbers for investors that own real property on Oahu. It shows that the total tax liability (state + city) is higher for a landlord on Oahu than it is in California. .81% was an average figure; there are municipalities with lower rates than that in California.
Further, our commercial property tax rate (which all small to large businesses pay), whether owner-occupied or leased, is among the highest in the country at 1.25%-1.4%. This tax is passed on to consumers in the form of higher cost goods and services. Add in the 4.5% GET and our businesses that rent their space (85%+ are renters) pay the most in combined rental income taxes and real property taxes.
Again and to repeat, GET (on rental income) is a tax that the landlord must pay. It is in addition to real property taxes. GET funds education and other public services conventionally funded by property taxes in all other states. I agree that homeowners get a great deal here, but we disproportionately shift that burden on our isle's tenants and businesses. 44% of all residents here on Oahu are renters (3rd highest in the nation). Trust me, I would gladly pay more in property taxes if we eliminated the tax on rental income; we are the only state in the entire country that levies a tax on long-term renters.
Again and to repeat, GET (on rental income) is a tax that the landlord must pay.
While the landlord cuts the physical check and files the forms - this is not a landlord expense.
No tenant/no rental income = no GET.
Tenants bear all the cost of the GET however you want to spin it - it is simply part of the rent whether it is explicit to the tenant or not.
The beauty of GET unlike other fees across the nation is that it is only incurred on the revenue - take for example, Seattle - typical family of 4 water bill is over $150/month so if the landlord includes water in the rent, it isn't much different than GET (and GET has other tax deduction benefits where water doesn't) - but if the family moves out, there is still some connection expense, etc....
Property tax happens no matter what/tenant or not. Why anyone gets hung up on GET as a landlord when the tenant is really paying it is odd. You remodel the property and have no tenant, you still pay property tax (which compared to much of the landlord is very low) but no GET.
While the landlord cuts the physical check and files the forms - this is not a landlord expense.
No tenant/no rental income = no GET.
Tenants bear all the cost of the GET however you want to spin it - it is simply part of the rent whether it is explicit to the tenant or not.
The beauty of GET unlike other fees across the nation is that it is only incurred on the revenue - take for example, Seattle - typical family of 4 water bill is over $150/month so if the landlord includes water in the rent, it isn't much different than GET (and GET has other tax deduction benefits where water doesn't) - but if the family moves out, there is still some connection expense, etc....
Property tax happens no matter what/tenant or not. Why anyone gets hung up on GET as a landlord when the tenant is really paying it is odd. You remodel the property and have no tenant, you still pay property tax (which compared to much of the landlord is very low) but no GET.
Well, it is a part of the overall tax expense associated with operating a rental property in Hawaii and, as far as I know, it is pretty unique to Hawaii.
So while on the surface it may appear that "property taxes are low in Hawaii", as one poster stated to support their argument that a landlord is greedy to charge $2,100 per month for a duplex, property tax alone does not tell a full story regarding state tax expenses on a rental property in Hawaii that the landlord must take into account when setting the rent.
It should also be pointed out that GET is also applied to purses in Hawaii.
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