We are all fascinated with incredible images coming from the Big Island. In a recent news report, Hawaii County officials were saying that due to the loss of property taxes from the affected area, they will need to do some budget changes. That story got me thinking of property taxes, ownership of your property, and how that all gets affected when property is now covered by 30 feet of still molten lava. I spoke with the head of the Real Property Tax Office for Hawaii County to get some answers.
The first question that came up was if your lot is covered in lava, do you still own it? After all, Hawaii State law says that all new land created by lava flows is automatically owned by the State. It turns out that law only pertains to new land created at the edges of the island. If lava flows onto your property, you still own your property, with the added gift from Madame Pele. I found it interesting that all the lots in the Royal Garden subdivision are still privately owned. Royal Garden is the former subdivision of 1,800 lots just east of Kilauea that was covered by lava starting in 1983. With all access cut off, no one lives there now.
Do the homeowners in the affected areas have to pay property taxes? Hawaii Mayor Harry Kim signed an executive order earlier this week suspending property taxes for those whose homes were either destroyed, are uninhabitable, or can no longer be accessed. In fact, since property taxes are paid January-June and July-December, those affected owners will get a refund check covering May and June of 2018.
The mayor’s order also gave special relief for the next tax installment due in August. If you read a recent article I wrote about property taxes, you’ll know there’s an appeal deadline to get taxes changed, and that deadline was in January. The mayor’s order gives relief from that deadline to update assessed values on those properties affected.
The Royal Garden model is still in effect. The county has updated its rules that any piece of property in Hawaii County assessed for less than $500, pays no property taxes. There used to be a minimum annual $25 tax, but it turns out it cost the county more than $25 to collect it.
The most unfortunate part of this tragedy is that most people that owned in the newly affected area don’t have insurance. The best guess I got from the county was that only about 10% of the owners had insurance in place.