Hawaii County has created a new real property tax classification for long-term rentals, and for many Big Island rental owners, this is welcome news.
For the 2026-2027 tax year, the new Long Term Rental tax rate is $7.75 per $1,000 of net taxable value. That is lower than the base residential rate of $11.10 per $1,000. Every little bit helps, especially with rising insurance, repairs, maintenance, and other ownership costs.
For example, on a property with a net taxable value of $500,000, the difference between the residential rate and the new long-term rental rate would be about $1,675 per year.
This new classification may also encourage more owners to consider long-term renting. For some second-home owners, the lower tax rate could make it more appealing to rent the property to a local tenant instead of leaving it vacant or using it only occasionally. For some vacation rental owners, it may make converting to a long-term rental more financially practical, especially when combined with steadier occupancy, fewer guest turnovers, and less day-to-day management.
To qualify, the property generally must be rented for at least six consecutive months to the same tenant or tenants. If there is more than one dwelling unit on the property, all dwelling units must qualify as long-term rentals. Short-term rental activity, including advertising the property for short-term rental use, can disqualify the entire parcel.
The important thing to know is that this classification is not automatic. Owners need to apply annually with the Hawaii County Real Property Tax Division, and the deadline is December 31 before the tax year being claimed. A current signed lease or rental contract must be submitted with the application.
You can review the county’s current tax rates here:
Hawaii County Property Tax Rates
You can find the application and program details here:
- Long-Term Rental Application
- Long-Term Rental Program Information
- Hawaii County Rental Programs Overview
A few key reminders:
- The application is due by December 31 each year.
- A current signed lease or rental agreement is required.
- The lease must be for at least six months.
- If there are multiple dwelling units, all must qualify as long-term rentals.
- Properties in the residential tax class with a net taxable value of $2,000,000 or more are not eligible.
- Short-term rental use, or short-term rental advertising, can disqualify the property.
- If the classification is breached, retroactive taxes and penalties may apply.
There is also a separate Affordable Rental Housing classification with an even lower tax rate, but that program has additional rent-limit requirements. For many regular long-term rental owners, the new Long Term Rental class may be the simpler and more relevant program to review first.
Overall, this is a positive step for Big Island property owners who are helping provide long-term housing. It will not solve every cost issue, but it is a practical incentive for owners who keep homes available for local residents. It may also give some second-home and vacation rental owners a reason to reconsider whether long-term renting could work for their property.
As always, confirm eligibility directly with the Hawaii County Real Property Tax Division or your tax professional, especially if the property has multiple units, mixed uses, a homeowner exemption, a recent or pending sale, or any short-term rental history.
