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- The term "fair market value" has a specific legal definition. It is the price at which a piece of property would sell assuming an "arms-length" transaction, assuming both the buyer and seller were aware of all material facts about the property. Put another way, the fair market value, or FMV, is the price at which a reasonable and informed person would be willing to buy or sell a property without knowing which side of the trade he was taking.
- Arriving at a fair market value for a property that has not sold is a challenging process, with a good deal of subjectivity. Real estate professionals, tax assessors and others with a desire to estimate a property's FMV often rely on professional property appraisers, who themselves rely on data from rental cash flows and recent sale prices from similar properties nearby.
- Because real estate prices in Hawaii tend to be high, property taxes are a significant line item in family budgets. Each county in Hawaii sets property taxes based on a recent assessment of each property's fair market value. For residential property in Hawaii County, for example, property taxes are $9.10 per $1,000 in appraised value for land and improvements alike. For Honolulu County, the tax rate is $3.42 for property owners who live on site, and $3.58 for absentee landlords.
- The State of Hawaii also allows individuals to keep a portion of their home equity in the event of personal bankruptcy. Hawaii law allows Hawaii residents to keep up to $20,000 in home equity or land equity. Those who are heads of household may retain up to $30,000.
Fair Market Value
Calculation of Fair Market Value
Property Taxes in Hawaii
Bankruptcy Exemptions
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