The Maui County Special Committee on Real Property Tax Reform convened on September 17, 2025, to address significant issues within the current property tax system. A key concern raised during the meeting was the delayed adjustment of property tax rates following changes in property use or ownership.

Currently, property tax rates do not reflect changes until the following year, which can create financial hardships for new local buyers. For instance, a local buyer who purchases a property previously used as a short-term rental (STR) must pay higher property taxes for up to a year before qualifying for lower homeowner rates. This delay poses a challenge for individuals trying to afford homes in Maui, as they face substantial tax bills during the transition period.

Additionally, the existing system allows out-of-state buyers to benefit from lower tax rates for a year, even if they plan to convert the property to an STR or second home. This loophole results in significant revenue losses for the county and limits the potential for affordable housing in the area.

To address these issues, several recommendations were proposed. These include implementing immediate adjustments to property tax classifications upon changes in ownership or use, requiring proof of intended use, and limiting classification changes to once per year to prevent abuse. The committee also discussed the possibility of adopting a supplemental assessment system similar to California's, which allows for immediate tax exemptions upon ownership changes.

The discussions highlighted the urgent need for reform in Maui's property tax system to alleviate financial burdens on local buyers and enhance the county's housing supply. The committee's next steps will likely involve further deliberation on these recommendations and potential legislative actions to implement necessary changes.