Maui Investment Property Taxes: What Out-of-State Investors Get Wrong
Most investors who lose money on Maui do not lose it on the purchase price. They lose it on the carrying costs and the exit taxes they never modeled, because none of them show up in the listing. Here are the four that matter most, and how to see them coming.
1. Property tax classification, not just the rate
On the mainland, property tax is roughly value times a rate. On Maui, the classification matters more than the value. The same $1,000,000 property can cost you anywhere from about $1,650 a year to $13,000 a year depending entirely on how it is used and classified.
Owner-occupied: about $1,650. Long-term rental: about $2,900. Non-owner-occupied: about $6,250. Short-term rental (TVR-STRH): about $13,000.
That is nearly an 8x spread on the identical building. If you buy a property currently classed as a short-term rental and model your returns on the long-term rental tax number, or vice versa, your entire pro forma is wrong. And the exemptions that move you into the cheaper classes are not automatic, you have to file for them.
2. HARPTA, the exit tax that surprises non-residents
When you eventually sell, if you are not a Hawaii resident, escrow withholds 7.25% of the gross sale price and sends it to the state. Not 7.25% of your profit. Of the whole sale price. Foreign sellers get FIRPTA stacked on top at another 15%.
It is refundable if you overpaid, but only after you file, and you can apply for a reduced-withholding certificate before closing if you plan ahead. Investors who do not know about HARPTA get a nasty shock at the closing table. Model it into your exit from day one.
3. The General Excise Tax on your rent
Hawaii does not have a sales tax, it has the General Excise Tax (GET), and unlike a sales tax it applies to rental income. If you rent property in Hawaii, you owe GET on the rent you collect, roughly 4.5% on Maui including the county surcharge. Long-term residential rentals and short-term rentals are both reached by it. It is a small percentage, but it is a percentage of gross that a lot of out-of-state investors simply forget to put in the model.
4. Insurance, which is climbing
Hawaii property insurance has risen sharply, and for condos the master-policy costs flow through to you as an owner. On older coastal buildings especially, insurance and rising HOA reserves have quietly turned some deals negative. Always pull the actual current insurance and HOA numbers, not last year’s, before you commit.
The pattern
None of these are reasons not to invest on Maui. They are reasons to underwrite it correctly. Every one of these costs is knowable before you write an offer. The investors who get hurt are simply the ones who found out afterward, and they are usually the ones who bought from three thousand miles away without a local running the real numbers.
If you send me a property you are considering, I will build you the honest carrying-cost picture: tax class, projected HARPTA exposure, GET, insurance, and HOA, so your pro forma reflects reality instead of the listing.
Mick St John, REALTOR® with Compass in Haiku. (808) 281-9530 or mick@stjohnhawaii.com.
General information, not tax advice. Confirm specifics with your CPA. Rates and figures current as of 2026 and subject to change.
Related reading: Maui Property Taxes Explained