5 Things to Know Before Buying Property in Hawaii (2024)

FAQs

5 Things to Know Before Buying Property in Hawaii? ›

With its limited availability, stable market, and growing vacation rental market, owning a piece of Hawaii is a solid, safe investment. Whether you're looking for a vacation home, rental property, or a long-term investment, Hawaii real estate offers something for everyone.

With its limited availability, stable market, and growing vacation rental market, owning a piece of Hawaii is a solid, safe investment. Whether you're looking for a vacation home, rental property, or a long-term investment, Hawaii real estate offers something for everyone.

If you plan properly and buy right, an investment in Hawai'i real estate is typically a safe and rewarding investment. And if you or someone else lives in the property, it can provide years of happiness and memories as well.

A Hawai'i Quirk: You Own the Home But Not the Land.

Will You Have to Pay Taxes When You Sell Your Home in Hawaii? Sales tax is not applied to property sales on either a federal or state level. However, if your home appreciated in value since you bought it, you may need to pay capital gains taxes on your annual tax return.

The state of Hawaii has the lowest property tax rate in the nation at 0.27%. Despite this, the median annual tax payment in the state is $1,971, which is much higher. This is because Hawaii has the highest median home value in the U.S. at $772,500. Not in Hawaii?

If you purchase residential land, make sure you ask questions about utilities, including water and electrical, as well as access to public roads. Owning land to build a vacation rental is a great idea, but Hawaii's laws prohibit it in most cases.

What is the cost of land in Hawaii? You won't find much for under $10,000 per acre, with some of the higher-priced regions costing hundreds of thousands per acre. Fortunately, places such as Captain Cook, Hawaii County and Pahoa offer an abundance of properties.

What is the downside of living in Hawaii? ›

However, there are also potential drawbacks to living in Hawaii, including the high cost of living, limited job opportunities, and the risk of natural disasters. The state's isolation from the rest of the nation and traffic congestion in larger cities can also be challenges for residents.

Hawaii Real Estate Market Statistics

The Hawaii sale-to-list price dropped 3.3 points year-over-year to 97.9%. 17.2% of home prices dropped in March 2023- compared to just over 10% in March 2022.

To live comfortably in Hawaii, an annual income of around $70,000 to $100,000 for a single person, or $120,000 to $200,000 for a family is recommended. Is it expensive to live in Hawaii? Yes, Hawaii is known for its high cost of living due to factors such as housing, groceries, utilities, and transportation.

Selling a home isn't easy. It's a high-stakes, complex transaction and requires a considerable amount of time and expertise to get a good outcome. If you're looking to sell your Hawaii home for the best price — and minimize stress along the way — you need to find a top-rated real estate agent in your area.

If you're after the best sales price, the best month to sell in Hawaii is August when houses sell for 10.83% more than average. If your priority is speed, May is the best time to sell because homes tend to sell 8 days faster.

This is not surprising, as Honolulu is one of the most popular destinations and a business center. Generally, the lowest housing costs are on the Big Island, which is considered the cheapest Hawaiian island to live on.

The counties administer the property tax. The Hawaii Revised Statutes are silent regarding personal property tax; the counties administer the property tax. However, some machinery and equipment is included in the definition of real property.

Property Tax Exemptions in Hawaii

You are eligible for the home exemption if you own and occupy the property as your principal home and file or intend to file your resident HI state income tax return or apply for a waiver of this requirement.

Under IRC section 1031, if you sell investment real estate and buy more expensive investment real estate within a prescribed time frame, you can defer capital gains taxes on the property you are selling.

How do I avoid paying HARPTA? ›

File a Form N-288B (with Form N-103 included if applicable) in a timely manner prior to closing to avoid HARPTA withholding altogether if you qualify. Or, maybe you qualify for an N-289 exemption? Alternatively, you may need to file a Form N-288C to get your money back… if you don't qualify for an exemption.

The basic home exemption for homeowners 70 years of age or over is $100,000. In addition to the basic exemption amount, an additional exemption of 20 percent of the assessed value of the property is also applied to reduce the net taxable value.

Real Property taxes are assessed annually and are due in two equal installments. First Installment (Cycle 1) – Due on or before August 20 for the period July 1 to December 31. Second Installment (Cycle 2) – Due on or before February 20 for the period January 1 to June 30. 8.

(1) Residential: 0.35% of assessed value (or $3.50 per $1000 of the net taxable real property value). This July 1, 2022 through June 30, 2023 (fiscal year 2022) rate applies to homes where the owner lives as their primary residence and to homes with an assessed value of less than $1,000,000.

Airport Greetings

Your friendly island greeter will welcome you with a warm “aloha” and present you with a beautiful fresh flower lei — a symbol of aloha, welcome and love in Hawaii.

The Hawaii land loan, for when you are building your dream home from the ground up. The minimum down is 25%.

Negotiation knowledge is the most powerful tool when making an offer on a property. Often, real estate developers and property sellers are among the best negotiators. Why? The more information you have about a prospective property, its initial price, how long the seller has owned it, the better offer you can make.

If you're traveling from the United States, Kahului is the cheapest Hawaiian city to fly into, making the Maui Kahului Airport (OGG) among the cheapest airports in Hawaii. This is a big plus to many vacationers because Maui happens to be one of the most popular vacation destinations.

Is it a good investment? Yes. Land is a tangible investment that will continue to go up in value over time. So, if a buyer purchases land today for $250,000, then in a few years, its value can increase to $400,000.

Hawaii is one of the few states with leasehold property. Most properties in Hawaii are sold as “fee simple” meaning you own both the physical property and the land. Fee simple ownership is the most comprehensive type of ownership.

What is the safest island in Hawaii to live on? ›

If you're just looking at the sheer number of incidents on each island, Kauai is the safest island to live on.

If amenities, urban life, and spectacular surf are your preferences, you may like Oahu. If you like rural living but also might enjoy some amenities and tourists along with beautiful landscapes, Maui may be your place. And if you want wide-open spaces and have an adventurous spirit, you may prefer the Big Island.

Notably, though, Hawaii was named the healthiest and happiest state seven years in a row in Gallup's National Health and Well-Being Index from 2012–2019. If you're a retiree looking to maximize your quality of life in your golden years, Hawaii is worth a look.

Smartasset recommends having at least $30,000 saved before applying for a home loan. They also recommend having a minimum income of $90,000 to ensure your monthly payment and other debts do no exceed 36% of your monthly income.

Anyone in the world can buy property in Hawaii. However, if you are not a resident of Hawaii, which is characterized as filing Hawaii state income taxes, then buying or selling land in Hawaii might have a few more complications.

In Hawaii, the most common down payment amount is either 5% or 10% of the purchase price for a conventional loan; some loans, like a VA Loan, do not need any down payment, and others, need more down. For example, if you were buying a house for $700,000 and needed 10% down, you would need $70,000 for the down payment.

Housing Costs

A one-bedroom apartment or home can range from about $1,500 to more than $2,000 per month and a two-bedroom apartment or a house will start at $1,800 per month. Looking at a luxurious, new one-bedroom condo? Expect to fork out at least $3,000 a month.

To live comfortably in Hawaii, an annual income of around $70,000 to $100,000 for a single person, or $120,000 to $200,000 for a family is recommended. Is it expensive to live in Hawaii? Yes, Hawaii is known for its high cost of living due to factors such as housing, groceries, utilities, and transportation.

To purchase a $200,000 house, you need a down payment of at least $40,000 (20% of the home price) to avoid PMI on a conventional mortgage. If you're a first-time home buyer, you could save a smaller down payment of $10,000–20,000 (5–10%).

Which Hawaiian island has the lowest cost of living? ›

What's the most affordable Hawaiian island to live on? The Big Island. With Hawaii's lowest average cost of living (according to MIT's Living Wage project), lowest fair market rents, and lowest typical yearly expenses, the Big Island can be the most economical island in Hawaii.

HOA fees in Honolulu will run between ~$0.60 to ~$1.50 per square foot and depending on the size of the condo can cost around $350 to $1,000 per month.

Many states regulate “cottage food,” meaning food made in a home kitchen for sale. Hawaii cottage food producers may sell food that is “not potentially hazardous,” which generally refers to food that is not time- or temperature-controlled for safety.

Down payment options for a $300K house

While some may require no down payment at all, most will need at least 3% of the purchase price ($9,000) or 3.5% ($10,500). However, if you have a down payment of 20% ($60,000), you could potentially save a substantial amount on mortgage insurance and interest charges.

FHA Loans. The minimum down payment to buy a home with an FHA loan is just 3.5 percent of the home's purchase price. That means the down payment for, say, a $250,000 home would be $8,750 with this type of loan.

Most lenders are looking for 20% down payments. That's $60,000 on a $300,000 home. With 20% down, you'll have a better chance of getting approved for a loan. And you'll earn a better mortgage rate.