Building new vs buying existing

[Mark]

Hey Everyone,

Hotkatz, I was interested to read your comment about RE Tax costs, building vs. buying. Are taxes in Puna really that much higher on new construction? Anyone know how to figure what they'll be? This scares me...

Thx,
M

Mark

[lquade]

mark, i dont believe so,other than maybe the first year. the plan, when submitted to building goes also to finance where they look at the square footage. sales prices in the area are also looked at. until your home is finialed it doesnt exist as far as tax change.. hint hint. every few years they reaccess, as they did these last couple of years as things were so volatile. first the massive jumps in real estate price, then the slowdown and price slide. the good news is, you get "locked in" as a homeowner once it is accessed. this does not mean if you buy an older home you get the previous owners rate. but i think hawaii has some of the cheapest property taxes in the nation and i have lived in several states... and of course after a certain age it is unbelievably cheap...

[John S. Rabi]

You actually can file for a "Non-speculative Dedication" and your property tax will be frozen for 10 years. You have to file before December 31st to be effective by the following year August.

Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
http://www.JohnRabi.com
Typically Tropical Properties
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[Hotzcatz]

Sorry Lquade, as far as the tax folks are concerned, permit or no permit, any existing house does exist and it IS taxable. Our house is a very old (100 years in 2011) "tear down" with no building permit (not required for buildings built prior to 1915, I think it is) and it has been taxed for as long as the tax department has been around. The homeowners exemption does not "lock in" the tax assessment, it merely chops a big chunk off the taxed value since you live in it. The taxed value is still assessed each year and the number can change from year to year. They tax construction as it is built, too. If it is half built, your taxes will go up and it will go up even more when it is finished. Putting an old cane house on an existing lot gets you to the lower "old house" taxes really quick, though. Then if you can add the homeowners' exemption it can be a substantial savings.

One of the reasons why we have low property taxes in this state is because we have very few services for the property taxes to pay for. Very few sewage systems, wastewater plants, not a lot of paved roads (although those have road fees to pay for them), limited fire stations, police presence, etc. We also have a general excise tax which is paid on EVERYTHING which generates more taxes than in many states. So even non-homeowners get to help pay for things.

It is the banks who give a mortgage on houses who do not see a building as existing until the permit is final and I think the electric company also has various levels they charge depending on the status of the building permit.

Well, just checked a few numbers. Our neighbor behind us built a new house several years ago in 2002-2003. Their land is worth $30K more than ours since they have a bigger lot but our houses are similar sized, theirs is, however significantly newer than ours and valued accordingly. Their annual taxes are $1,400 and another neighbor across the road from us also built that year and has similar taxes. Another neighbor has a house twice the size of ours on a similar sized lot and theirs is a bit newer but still an "old" house (circa 1924)and their taxes are approximately $600 a year. Our house is older and half the size so our taxes are half of that.

[lquade]

you are correct hotzcatz, what i meant to say about "locked in" is if you are a homeowner, at that point, your taxes can only go up 3 percent a year. of course once harry leaves office this can go out the door with a new mayor and new council.. of course, the old (pre permit) houses were taxed. i will try again: when and if they do assessments your tax base can change. in years past this was done on "the books" and rarely on visual inspection. so until permits had activity on them, this did not happen.. now in the "new world" alot of inspectors were hired to keep up with the building boom. now there is no boom... so what are these county employees up to? that remains to be seen. my taxes this year went from 50dollars to 75 dollars but it was due to the land not the house. and the increase in the minimum you had to pay... for example some of my land went up to 100 per lot a few years ago when they changed that minimum... it is all really up to the whim of the existing council and many people are worried that with the economic slide, the new government will look to taxes as a way to balance the budget. i may not always be current, things change rapidly and some of the newer people actually have newer facts which is why i frequent the punaweb..ps you spell checkers have at it, my fingers are faster than my brain

[Hotzcatz]

I think the inspections are also different in each area depending on who the inspector is. Ours likes to do annual visual inspections but we are up the coast from Hilo. When I lived in Hawaiian Acres, I don't think there was ever an actual inspection done. Plus all you'd see would be an opening in the trees and inspectors can't just wander onto properties. In Nanawale they did several inspections but they weren't annual that I knew of. Here our inspector comes past each year but her mom was born in this area and she grew up here small kid time so she would have a greater interest in this area.

Yeah, the council is the one who decides how much per $1,000 of value the new tax will be. We need to keep an eye on them since they will be looking for money most likely pretty soon.

[Mark]

Thanks all!

Mark

[robguz]

For me, building was far cheaper, but I already had a lot I bought almost 5 years ago. had I bought it when i started building, it would have been about $35,000 more. I also didn't have a job during building. Anyway, I finished my house for about $150,000 not including the land, but including appliances. It's 1350 sq ft. including the covered lanai. On the next lot is a sad little poorly designed structure that is 450 sq ft and they have been trying to sell for $150,000. So if you can build quickly and inexpensively, it is still the better deal.

[StillHope]

Robguz,was that house like almost 200 K a year ago?

[hpp4me]

For those who follow RE prices, here is a listing of HPP land sales in October.
http://www.localhawaiirealestate.com/Haw...20LAND.pdf