Absentee Owners

How many homes in Hawaii are owned by out- of-state investors?

August, 2016

How many homes in Hawaii are owned by out- of-state investors?

This question comes up every time a luxury high-rise breaks ground in Kakaako. It’s trotted out by the neighbors of those multimillion-dol- lar homes along the beach in Lanikai, Kahala and Kailua. More pointedly, the question arises in every conversation about Hawaii’s a ord- able-housing crisis. How many vacation homes, investment properties and part-time residences sit empty most of the year?

It turns out, there’s no easy way to find out, says Jim Pietsch, CEO of Title Guaranty. The state cer- tainly doesn’t know. There’s no foolproof evidence on the title that a property has an absentee owner. There are clues: an out-of-state address for the county property tax bill, no home exemption for the property tax, or a foreign corporation listed as the fee owner. None of these, though, are definitive.

For tax reasons – and sometimes anonymity – the famous and the wealthy often own property through LLCs and trusts. Tax bills are frequently directed to their attorneys or property-manage- ment companies. In addition, while claiming a home exemption technically depends on where

a multiproperty owner spends the most time, it’s often the result of which home o ers the greatest tax savings. Finally, a property may be owned by an out-of-state entity, but rented to a local family. None of that information is obvious from looking at the documents filed with the Bureau of Conveyances.

“Even if we wanted to identify all the proper- ties with an out-of-state address for their tax bill,” Pietsch says, “it would be very expensive to do. We would have to write a custom computer program for that. And it still wouldn’t prove the property was vacant.”

Some questions are very hard to answer.

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Author:

Dennis Hollier