The property tax rate in Honolulu is among the lowest in the United States. However, the actual cost of homeownership is by no means light, as it is the high home prices themselves that are the main factor, not the tax rate.

The effective property tax rate in Honolulu County (across Oahu) is about 0.32% based on the median. This is nearly the same as the state median (0.31%) and less than a third of the national median (1.02%). For owner-occupied homes, a homeowner exemption applies, allowing a deduction of $100,000 from the assessed value, after which a tax rate of $3.50 per $1,000 is applied.

The median price for single-family homes on Oahu has recently surpassed $1.2 million. The overall median for residential properties, including condos, is often estimated to be around $700,000. Based on the $700,000 figure and applying the homeowner exemption, the annual property tax comes out to approximately $2,100.

Insurance premiums reflect the unique circumstances of Oahu. In addition to hurricane risk, the recent Lahaina wildfire has made fire-related insurance assessments more stringent across Hawaii, and rising reinsurance costs seem to be driving up premiums as well. For single-family homes, it is realistic to expect annual premiums in the range of $2,000 to $2,800.

If you base maintenance costs on 1.5% of the home price, a $700,000 home would incur about $10,500 annually. Due to the geographical characteristics that require transporting materials and labor across the Pacific, construction and parts costs tend to be higher than on the mainland, so it's advisable to budget for maintenance more generously than on the mainland.

If purchasing a condominium, there will be additional maintenance fees typical of an HOA. It is common for management fees for Oahu condos to exceed $500 to $1,000 per month, making this an important item not to overlook in annual ownership cost calculations.

When combining property taxes, insurance premiums, and maintenance costs for single-family homes, the total annual ownership cost is estimated to be around $14,600 to $15,000. Despite the low tax rate, the absolute amount appears large primarily due to the high home prices on Oahu.

It is also important to note that neighboring islands like Maui, Kauai, and the Big Island of Hawaii operate independent tax systems with different rate structures. If you plan to reside in Oahu, applying for the homeowner exemption is the most certain way to reduce your tax burden.