Residential A Class Property Tax Considerations For Senior Homeowners
Hawaii families grapple with the high costs of caring for their loved ones as they age and need assistance. The aging baby boomers have quickly become the fastest growing demographic group and, in the coming years, we anticipate the demand at senior living communities to increase tremendously. Even today, there are senior living communities that are experiencing wait lists.
According to Shari Motooka-Higa, Certified Senior Advisor and Instructor of the Seniors Real Estate Specialists Designation course, the cost of senior care continues to escalate steadily each year, yet, the supply for senior housing is not keeping pace with the demand.
As these seniors look to transition into a new home, many contemplate whether to rent or sell their existing residence with the intent of using rental income or proceeds to subsidize costs of entrance fees at a senior living community, pay for nursing home expenses or move to a downsized property.
Kay Mukaigawa, President and Principal Broker of Primary Properties said, “It is a difficult decision and each family’s situation is unique.”
In weighing the pros and cons of each of the options, one area of importance to highlight is real property taxes. Recently, the City and County of Honolulu passed the Residential A Class tax bill which increases the real property tax rate for homes assessed at $1 million or more and have no home exemption. This is an important concern, as the income one may be counting on can greatly diminish with the increased property taxes on investment property.
Additionally, if you rent your property for three years or more, you are subject to pay a higher capital gains tax upon the sale, as you are no longer classifying your home as a primary residence.
Join Kay Mukaigawa and Shari Motooka-Higa for an informative free seminar that will elaborate more on this topic and other concerns that Seniors need to be aware of as they make plans for transitioning into a new home. Prior to making any decisions, it is strongly recommended that readers consult appropriate experts and licensed professionals for any legal, tax, and accounting advice to determine how any information shared may apply to their specific circumstances.