With housing costs soaring, many families have moved out of state to save money and pay their bills.
But for those who live here, some are seeing an out-of-state tax bill that could leave them in arrears.
A new analysis by the real estate brokerage firm IBISWorld, based on data from the IRS, estimates the average real estate transaction in Hawaii will cost $3,000 more next year than in 2019.IBISWorld’s analysis is based on tax filings from the last year of the current tax year, which ended in December.
If the average tax bill rises by an average of $300, that would put Hawaii ahead of the average of states that also had a significant tax increase in the first half of 2019, the analysis found.
For example, in 2019, Hawaii’s average tax increase was $1,988.
The state’s tax rate in 2019 was 1.95%, compared with 1.72% for the rest of the country.
In 2019, $3 million in sales in Hawaii came from out of the state, up from $1.8 million in the previous year, according to IBISworld.
This could increase the average bill by an additional $800 in 2019 because of out-state sales, IBIS World found.
To help pay for the out-country sales, Hawaii households with one to five children will see an average $6,700 increase in tax bill.
Households with more than five children could see a tax increase of $1 million, IBisWorld found.
Hawaii, of course, has a tax code that is not particularly complicated.
Most of the costs associated with real estate transactions are tax-deductible for all taxpayers.
But, for some, it may be more difficult to get the same tax relief from the state tax code.
For instance, the Hawaii Income Tax Credit (HITC), which helps people lower their taxes by reducing their taxable income, is available to taxpayers with income over $300 a month.
But many Hawaii residents are not eligible for the credit because of a $1 monthly filing fee and some have higher incomes than $300.
The HITC does not apply to some people with joint returns, though.
The tax credit only applies to the first $1 billion of taxable income for which the IRS allows the credit.
Hawaiian tax officials have been working to get out of a tax compliance nightmare.
In 2018, the state started issuing a “State of Hawaii” brochure for property owners that details their tax obligations and how they can help reduce their taxes.
In 2019, a similar brochure will be mailed to every property owner in Hawaii.
Hawians should consider the out of pocket cost of the tax bill when deciding where to live.
IBIS has also put together an online calculator to help you figure out how much money you’ll need to pay off your property taxes.