Important Note: This blog post is for informational purposes only and does not constitute legal, tax, or financial advice. Hawaii property tax rules, conveyance tax rates, and withholding requirements are subject to change and vary based on individual circumstances. Buyers and Sellers should consult a qualified Hawaii real estate attorney, CPA, or tax advisor before making decisions based on any information contained here.
Purchasing a luxury property on the Big Island is a meaningful decision on every level. It deserves to be made with a clear understanding of not just the property itself, but the ongoing and transactional tax implications that come with it.
Hawaii's tax environment is genuinely different from the mainland. The good news for many Buyers is that Hawaiʻi County property tax rates are among the lowest in the United States. The nuance is in the details, particularly around owner-occupancy status, title structure, and the evolving policy landscape for luxury second homes.
Updated October 28, 2026 with Hawaiʻi County's rates for fiscal year 2026–27.
The single most impactful tax decision a Buyer of a Big Island primary residence can make is to file for the Hawaiʻi County home exemption. It places the property in the Homeowner class, taxed at $5.75 per $1,000 of assessed value for 2026–27, and reduces the taxable value by the exemption amount. A second home or investment property is instead taxed at tiered non-owner-occupied rates, each applying only to the value within its band, as reported by Big Island Now:
| Hawaiʻi County class (FY 2026–27) | Rate per $1,000 of assessed value |
|---|---|
| Homeowner (primary residence with the home exemption) | $5.75 |
| Residential, not owner-occupied: first $2 million of value | $11.10 |
| Residential, not owner-occupied: portion from $2 million to $4 million | $14.50 |
| Residential, not owner-occupied: portion above $4 million (new Tier 3) | $17.00 |
| Long-term rental | $7.75 |
The difference adds up quickly as value rises:
| Assessed value | Primary residence ($5.75) | Second home (tiered) | Difference |
|---|---|---|---|
| $2,000,000 | $11,500 | $22,200 | $10,700 |
| $3,000,000 | $17,250 | $36,700 | $19,450 |
| $4,000,000 | $23,000 | $51,200 | $28,200 |
| $5,000,000 | $28,750 | $68,200 | $39,450 |
Illustrative annual figures at FY 2026–27 rates, before the home exemption amount and any other exemptions or credits, which lower the primary-residence figure further. Actual bills depend on the County's assessed value and classification.
More detail on the new top tier is in our explainer on Hawaiʻi County's luxury property tax tier.
The exemption is not automatic. It must be filed with Hawaii County within the applicable deadline, and the Buyer must occupy the property as their principal residence. How title is taken matters: title in a personal name or a revocable living trust where the settlor is the occupant generally qualifies; title in an LLC generally does not.
The conveyance tax is paid by the Seller, but Buyers should understand it because Buyer behavior and title structure directly affect the rate the Seller faces. As Hawaii Living notes, when a Buyer takes title as a non-resident or second-home purchaser, the Seller's conveyance tax can increase. Understanding this allows Buyers to negotiate with awareness of how their intended title structure affects the economics of the transaction for the other party.
Buyers who are not Hawaii residents, which describes a large proportion of luxury property purchasers in Kona and on the Kohala Coast, should understand that when they eventually sell, they will be subject to HARPTA withholding as a nonresident Seller. At 7.25% of the gross sale price, this is a meaningful cash flow consideration. Hawaiʻi Life's HARPTA explainer is a strong resource for understanding how the withholding works and what options exist to manage it. Knowing about HARPTA at the time of purchase allows Buyers to plan for it appropriately over the holding period.
Policy in Hawaiʻi continues to move toward taxing luxury second homes and investment properties differently from owner-occupied primary residences. At the county level, that has already happened: Hawaiʻi County adopted a $17.00 per $1,000 rate on second-home value above $4 million and raised the $2 million to $4 million band to $14.50 for fiscal year 2026–27, as Big Island Now reported. At the state level, Civil Beat has reported on proposals to raise conveyance tax rates on high-value sales; bills to restructure the conveyance tax did not pass in the 2026 session but may return. Buyers at the upper end of the Big Island luxury market should factor these trends into their long-term carrying cost modeling.
Property taxes, conveyance obligations, HARPTA mechanics, and title structuring are not areas where a Buyer should rely on general knowledge from other markets. Hawaii operates differently, and the stakes in a multi-million dollar luxury transaction are high enough to warrant getting the advice right. Marco A. Silva's role is to make sure the right questions are asked early, the right professionals are engaged, and the Buyer arrives at closing with a full understanding of what they are buying and what it will cost to own, hold, and eventually sell it. You can learn more about Marco's background at the Marco In Kona about page, explore current properties at marcoinkona.com/active, or connect with Marco directly to begin the conversation.
Big Island Now: 'Hawaiʻi County property tax rates set for upcoming 2026-27 fiscal year'
Hawaiʻi Public Radio: 'Ultra luxury Hawaiʻi Island homes could get separate property tax tier'
Civil Beat: 'Higher Luxury Home Taxes? State Eyes New Ways To House Hawaiians'
Hawaii Living: 'Hawaii Conveyance Tax Peculiarities – Save $Thousands In Taxes'
Hawaiʻi Life: 'Demystifying HARPTA and FIRPTA: What Real Estate Investors Need To Know'
Kauai Property Search: 'Understanding the Hawaii Conveyance Tax: What Sellers Need To Know'
What is the Hawaiʻi County homeowner's exemption and how do I qualify?
The home exemption places an owner-occupied primary residence in Hawaiʻi County's Homeowner class, taxed at $5.75 per $1,000 for 2026–27, and reduces its taxable value. Qualifying requires that the Buyer use the property as their principal residence and file the exemption with Hawaii County within the required deadline. Title must generally be held in a qualifying form, such as personal name or a revocable trust where the occupant is the settlor, and not in an LLC or other entity that disqualifies owner-occupant status.
What is the difference in property tax rates between owner-occupied and non-owner-occupied properties in Hawaiʻi County?
For fiscal year 2026–27, a primary residence with the home exemption is taxed at $5.75 per $1,000 of assessed value. Non-owner-occupied residential property is taxed at $11.10 per $1,000 on the first $2 million of value, $14.50 on the portion from $2 million to $4 million, and $17.00 on the portion above $4 million. On a $2 million home, that is about $11,500 a year as a primary residence versus about $22,200 as a second home, before exemptions. On a $5 million home, it is about $28,750 versus about $68,200.
How does the conveyance tax affect me as a Buyer?
The conveyance tax is paid by the Seller, but the Buyer's intended use and title structure affect the rate the Seller faces. If a Buyer takes title in a non-qualifying entity, the Seller may face a higher conveyance tax rate, which can create negotiating dynamics at the closing table. Buyers should understand how their title structure affects the transaction economics for both parties.
What should I know about HARPTA as a future Seller?
If you are purchasing a Big Island property as a nonresident of Hawaii, you will be subject to HARPTA withholding when you eventually sell, at 7.25% of the gross sale price. Planning for this at the time of purchase includes maintaining accurate records of your basis and capital improvements and engaging a Hawaii tax professional well in advance of any future sale.
How is the luxury property tax landscape changing in Hawaii?
Both Hawaiʻi County and the state legislature are moving toward differentiated tax treatment for luxury second homes and investment properties. Hawaiʻi County adopted a third property tax tier of $17.00 per $1,000 on non-owner-occupied value above $4 million for 2026–27, and state lawmakers have considered higher conveyance tax rates on high-value transactions. Buyers at the upper end of the market should factor these policy trends into their long-term ownership modeling.
How do I find a qualified Hawaii real estate attorney or CPA for my Kona purchase?
Marco A. Silva works with a network of qualified legal and tax professionals who specialize in Hawaii real estate transactions. Contact Marco through marcoinkona.com/contact and he will connect you with the right advisors for your specific situation.