1031 Exchange in Kahului Wailuku Lahaina MSA
The Kahului-Wailuku-Lahaina MSA presents ultra-high-value 1031 exchange opportunities with the lowest property tax rates in the US (0.18%), but requires substantial capital due to median home prices of $1.1M-$1.4M and tourism-dependent economy recovering from Lahaina fire impact.
Population
165,000
Key Industries
Tourism/Hospitality, Government, Healthcare
Table of Contents
Information is for educational purposes only. Consult qualified professionals for specific advice. This market requires substantial capital and carries unique risks including tourism dependence and natural disaster exposure.
Local Tax Considerations
Property taxes, transfer taxes, and local incentives
Property Tax Rates
Average Rate
0.15% - 0.20%
Assessment Method
Assessed Value (Hawaii Property Tax Code)
MSA rate (0.18%) vs State average (0.26%)
-31% below state average (lowest in US)
Transfer Taxes & Fees
Transfer Tax Rate
0.1% - 1.25% graduated
Hawaii conveyance tax ranges from 0.1% to 1.25% based on property value, plus recording fees
Local Tax Incentives
Hawaii Economic Development Incentives
Various state incentives for business development and renewable energy
Eligibility: Qualifying commercial, industrial, and renewable energy projects
Maui County Development Incentives
Limited local incentives for affordable housing and economic development
Eligibility: Qualifying affordable housing and job creation projects
Opportunity Zones
Number of Zones
2
Key Locations
- Lahaina (post-fire reconstruction)
- Wailuku
Opportunity Zones offer significant tax benefits for long-term investments, including deferral and potential elimination of capital gains taxes.
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Market Profile Dashboard
Economic indicators and market trends
Population
165,000
Growth: +0.8% annually
Median Income
$95,076
Unemployment
3.0%
Job Growth
-2.5% (post-fire adjustment)
Economic Drivers
Market Trends
Median Home Price
$1,100,000 - $1,400,000
Average Rent
$3,850/mo
Cap Rates
3.5% - 5.0%
Demographics
Median Age
42.9 years
Bachelor's Degree+
35.8%
Owner Occupied
58.2%
Property Type Analysis
Investment opportunities by asset class
Vacation Rental
Premium vacation rental market with strong demand but regulatory restrictions and extremely high acquisition costs.
Market Metrics
- Cap Rates: 4.5%
- Vacancy Trends: Seasonal patterns with 15-25% vacancy during slower periods
- Demand Forecast: Strong long-term demand but subject to tourism cycles and regulations
Risk Factors
- Extreme acquisition costs ($1M+ typical)
- Tourism dependence and economic cycles
- Regulatory restrictions on short-term rentals
- Natural disaster exposure (fires, hurricanes)
Opportunities
- Premium vacation rental rates ($400-800/night)
- Strong long-term appreciation potential
Long-Term Rental
Limited inventory with strong demand from local workforce, but extremely high acquisition costs limit returns.
Market Metrics
- Cap Rates: 3.8%
- Vacancy Trends: Very low vacancy at 4.2% due to housing shortage
- Demand Forecast: Strong demand from local workforce and high cost of living
Risk Factors
- Extreme acquisition costs reducing returns
- Limited inventory and development constraints
- High cost of living affecting tenant pool
Opportunities
- Housing shortage supporting strong demand
- Stable local workforce rental market
Neighborhood Spotlights
Up-and-coming areas and investment hotspots
Lahaina (Reconstruction Zone)
Historic town rebuilding after 2023 fires with opportunity zone designation
Investment Thesis
Long-term reconstruction opportunity with opportunity zone benefits, but requires patience and significant capital for rebuilding efforts.
Median Price
$950,000 (pre-fire baseline)
Price Growth
TBD (reconstruction phase)
Rental Yield
4.2%
Days on Market
N/A (limited inventory)
Key Highlights
Development Pipeline
Major reconstruction and redevelopment projects planned
Kihei
South Maui resort area with vacation rental and residential properties
Investment Thesis
Strong vacation rental market, resort proximity, and consistent tourism demand supporting premium property values.
Median Price
$1,460,000
Price Growth
+8% YoY
Rental Yield
4.8%
Days on Market
65 days
Key Highlights
Development Pipeline
Limited new development due to zoning constraints
Wailuku
County seat with government employment and more affordable housing options
Investment Thesis
Government employment stability, opportunity zone benefits, and relative affordability for Maui market.
Median Price
$889,000
Price Growth
-14.4% YoY
Rental Yield
5.5%
Days on Market
78 days
Key Highlights
Development Pipeline
Government and mixed-use development projects
Kahului
Commercial and airport hub with industrial and residential properties
Investment Thesis
Commercial center with airport proximity, industrial employment, and essential services supporting steady demand.
Median Price
$1,000,000
Price Growth
+2.6% YoY
Rental Yield
5.2%
Days on Market
58 days
Key Highlights
Development Pipeline
Commercial and industrial expansion projects
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Compare Markets
See how this MSA stacks up against others
Compare Markets
Metric | Kahului Wailuku Lahaina (Current) | Honolulu | Hilo | Urban Honolulu |
---|---|---|---|---|
Population | 4.0M | 4.0M | 4.0M | 4.0M |
Median Property Price | $750K | $750K | $750K | $750K |
Average Cap Rate | 5.2% | 5.2% | 5.2% | 5.2% |
Job Growth Rate | 2.1% | 2.1% | 2.1% | 2.1% |
Rental Yield | 4.8% | 4.8% | 4.8% | 4.8% |
Days on Market | 25 | 25 | 25 | 25 |
Frequently Asked Questions
Common questions about Kahului Wailuku Lahaina 1031 exchanges
Maui offers the lowest property tax rates in the US (0.18%), strong long-term appreciation, premium vacation rental income potential, and unique paradise location. However, it requires substantial capital ($1M+ typical) and carries tourism-dependent risks.
The 2023 Lahaina fires created both challenges and opportunities. Lahaina has opportunity zone designation for reconstruction, but the market is adjusting. Other areas like Kihei and Wailuku remain active, though the overall tourism economy is recovering.
Primary risks include extreme acquisition costs ($1M+ median), tourism dependence (2/3 of economy), natural disaster exposure (fires, hurricanes), regulatory restrictions on vacation rentals, and limited inventory due to geographic constraints.
Hawaii offers the nation's lowest property tax rates (0.18% effective in Maui), though conveyance taxes range 0.1-1.25%. The low property taxes help offset high acquisition costs, but investors need substantial capital and should focus on long-term appreciation and premium rental income.
Maui is suitable for high-net-worth investors seeking unique paradise properties with long-term appreciation potential. Requires substantial capital ($1M+ typical), understanding of tourism cycles, and patience for market recovery. Consider vacation rental regulations and natural disaster risks.