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Counties of Kauai and Hawaii Announce 2019 GET Surcharges

January 27, 2019 Hawaii Rentals Comments Off on Counties of Kauai and Hawaii Announce 2019 GET Surcharges

In addition to the GET surcharge of .50% levied by the City/County of Honolulu, the Counties of Kauai and Hawaii have announced new surcharges on transient vacation rentals beginning in January of 2019 in the following amounts:

County of Kauai — 0.50%

County of Hawaii — 0.25%

Please see the State Announcement to find out more information. 

VRBO/HomeAway Adds Property Registration-Tax ID Field to On-line Listings.

January 23, 2019 Hawaii Rentals Comments Off on VRBO/HomeAway Adds Property Registration-Tax ID Field to On-line Listings.

January 22, 2019.  VRBO/HomeAway has added a new field to the property description of vacation rental properties listed with them.  All owners of vacation rentals who utilize VRBO/HomeAway for advertising their properties, should be sure that their property TA and GE tax number/registration is up to date and included in the field.  To locate it, access the property editor and then click on the Description tab at the top of the page.  Once on the page, enter your property’s tax ID number in the “Registration Number” field.   

May 1, 2018 — End of Legislative Session

May 12, 2018 Hawaii Rentals Comments Off on May 1, 2018 — End of Legislative Session

Aloha

In this edition:

  1. Legislature Update
  2. County Update – Big Island

 

  1. Legislature Update

The legislature is all but over for the year.  There are three main bills we were dealing with at the end.  The bill to require local contacts to be real estate agents fortunately was defeated quickly.

SB2963 / HB 2605

This is the latest incarnation of the AirBnB bill, allowing the advertising platform to collect and remit taxes on the owners’ behalf.  It has been around for 3 or 4 years now, always failing to pass.  This year however, the bill took on a lot of additional provisions, including the right of counties to obtain your personal tax information, the right for counties to change the zoning to declare a property to be ineligible for vacation rentals and then seize the property, and requiring AirBnB & HomeAway to immediately cease doing business with any owner who isn’t compliant with all regulations.  The bill originally had language creating a felony for non-compliance, but that has changed to a $25,000 fine.

It essentially assumed all vacation rental operators were criminal until proven otherwise.

We learned yesterday that this bill has been deferred indefinitely.  This is the best possible outcome.

The Senate was very supportive of this draconian bill, however, in the House, reason prevailed and the two houses ultimately could not agree.  The House of Representatives recognized this bill as being over the top and stopped it. The House also recognized what the Senate did not – zoning compliance is a county issue, not a state issue.

AirBnB had already backed away from the bill, so even if it had passed, no advertising platform was going to voluntarily subscribe to the tax collection work.

Here is why we were concerned about this bill:

  1. The advertising broker (i.e. AirBnB) may collect and remit tax on behalf of all advertisers.  However, if they mess up, AirBnB and the owner are jointly and severally liable for all taxes.  So, if AirBnB collects TAT and doesn’t remit it, you are potentially on the hook.
  2. The bill also requires AirBnB to provide details of how many nights were rented, the rates per night, the address and name and number of the local contact – and this information can be made available to the Counties.  The County of Honolulu has been asking for this for years to help with compliance with their complex permitting requirements.  No other tax payer is required to provide this level of information without a subpoena.
  3. The advertising broker is required to share your 1099 information with the county.  The State Department of Tax is, by federal law, strictly forbidden to release this information to anyone.  The bill requires all operators to waive their right of privacy and permit the advertising platform to share all of their information.
  4. All operators must provide proof of compliance with all zoning, land use and tax laws.  Our concern here is in providing positive proof of compliance – how do you prove you are legal in every regard.  The Counties have no system to accommodate this.  Most counties don’t even have current regulations
  5. Failure to comply with any tax or zoning law – or commit any act which the county doesn’t like – may result in a fine of $25000.  Failure to respond within 7 days results in a second $25,000 fine.  This is better than the earlier draft which was a Class C Felony (more than one year in prison).  The bill also provides for not only seizure of the property but also all income earned from operating a vacation rental.
  6. The bill also allows counties to phase out all transient accommodation in any zone for any reason.  This is concerning as county councils and the state legislators are very prone to pressure from unions, neighborhood groups, and anyone else who might vote.

SB2999

The Hawaii Teachers union has once again brought forward the Constitutional Amendment to require the TAT to be increased in order to fund education in the State of Hawaii. We saw this one go right to the bitter end last year before ultimately failing so that the TAT could be increased to pay for the Honolulu rail system.

This year, the bill morphed into a proposed property tax on “investment real property”. The legislators didn’t define any rates and didn’t determine if any properties would be excluded from the definition. The referendum will go to a vote of the electorate, probably this November. After that, it will be up to the legislature to iron out the details.

One other bill will change the way properties owned by non-residents are taxed upon sale. When you sell a property, a percentage of the sales proceeds is withheld until you file your tax returns or other required forms. The withholding rate will go up to 7.25%.

Another bill clarifies that all amounts charged to transient vacation rental guests are subject to TAT. t seems some hotels are charging a resort fee but not collecting tax on the resort fee. RBOAA supports the hotels being required to play on a level playing field with vacation rental owners, however the Senate showed their support to the hotel industry and deferred this measure..

Speaking of hotels, they have had seven consecutive years of increased occupancies and increased room rates. Each of the past seven years has broken all historical records. Yet they are very concerned that we are providing competition to them.

  1. County Update

At RBOAA, we are focused on the state legislature.  We would love to be able to be involved at the county level as well, but, simply put, we need volunteers to take that on.

This isn’t just our normal plea for volunteers.  As we have been saying for many years now, the fight is going to move from the state to the counties.  We are seeing this increasingly become true.  The state is going to be taking some of the TAT revenues it gets and giving it to the counties to enforce their regulations.  So, more and more, the counties are going to play a significant role.

Here is what some our eagle-eyed members have shared with us recently

On the Big Island, the county council was considering a regulatory framework around vacation rentals on the island.  The original proposal seemed fair, but those watching Bill 108 are quite concerned.  This bill goes back to County Council on May 8.  There is a Facebook group called “Hawaii TVR Alliance” involved on this, as are three of our members fortunate enough to have property on Hawaii.

Maui recently passed a bylaw which requires a property to be owned for five years before it can be turned into a vacation rental.  We think this only applies to properties which have never been legal vacation rentals in the past and is primarily focused on restricting growth of vacation rentals in residential areas.  Most vacation rentals on Maui are in “resort zones” and would be unaffected by the new rules.

Maui is also creating a new property classification for vacation rentals.  The rate hasn’t been set, but as my place is on Maui, I know that I already pay significantly higher property taxes than an identical property which is not a vacation rental.  [On Maui, one of the lowest property tax rates is actually reserved for hotels.]

We expect all counties will come up with a new property tax classification for short term rentals.

On Honolulu, there are numerous proposals around to update their 30 year old set of regulations.

Please remember that everyone at RBOAA is a volunteer and is donating their time on top of working regular paying jobs and whatever else they have going on.  These people dedicate countless hours of their personal time to help protect our – and your – investments in Hawaii.

Special thanks to Leslie F who put in countless hours on your behalf. She is truly amazing

Have a wonderful summer!
Mahalo and Aloha

Neal

March 30, 2018 — Update

April 11, 2018 Hawaii Rentals Comments Off on March 30, 2018 — Update

Aloha

In this edition:

  1. Legislature Update
  2. Fake News
  3. County Update

It’s been a while since we have sent out a newsletter.One of the downsides of having a full time job which sometimes becomes a “very full” full time job is that I can’t always dedicate all my time to RBOAA.Be assured, we are still watching and responding to all the bills as they come up

1. Legislature Update

There are three main bills we are currently dealing with.  The bill to require local contacts to be real estate agents fortunately was defeated quickly.

SB2963 / HB 2605

This is the latest incarnation of the AirBnB bill, allowing the advertising platform to collect and remit taxes on the owners’ behalf.  It has been around for 3 or 4 years now, always failing to pass.  This year however, the bill took on a lot of additional provisions, including the right of counties to obtain your personal tax information, the right for counties to change the zoning to declare a property to be ineligible for vacation rentals and then seize the property, and requiring AirBnb & Homeaway to immediately cease doing business with any owner who isn’t compliant with all regulations.  The bill originally had language creating a felony for non-compliance, but that has changed to a $25,000 fine.  So, it is all quite frightening really.

What is interesting is that AirBnB has publicly backed away from the bill.  Additionally, the House committees so far have declined to consider the bill.  In response to the House inaction, the Senate has now twice taken a bill, removed all the language and replaced it with the language they want.  This incredibly undemocratic move is referred to as “gut and stuff”.   But they did this in order to force a showdown with the House when the bills go to conference.

Those of you who list with VRBO and Homeaway would have received an email a few weeks ago about this bill.  We are pleased that Homeaway, after many years of ignored requests from RBOAA, finally stepped up to support the advertisers.  Their message unfortunately came out too late for anyone to do anything.

The Bill is next scheduled to be heard on Tuesday April 3.  We have no doubt it will pass the committee as the chair of the committee has been instrumental in keeping this bill alive.  Keep reading as we do have a small request of you.

Here is why we are concerned about this bill:

  1. The advertising broker ( i.e. AirBnB) may collect and remit tax on behalf of all advertisers.  However, if they mess up, AirBnB and the owner are jointly and severally liable for all taxes.  So, if AirBnB collects TAT and doesn’t remit it, you are potentially on the hook.
  2. The bill also requires AirBnb to provide details of how many nights were rented, the rates per night, the address and name and number of the local contact – and this information can be made available to the Counties.  The County of Honolulu has been asking for this for years to help detect compliance with their complex permitting requirements.  No other tax payer is required to provide this level of information without a subpoena.
  3. The advertising broker is required to share your 1099 information with the county.  The State Department of Tax is, by federal law, strictly forbidden to release this information to anyone.  The bill requires all operators to waive their right of privacy and permit the advertising platform to share all of their information.  (Facebook didn’t ask, but you knew they were doing it anyways!)
  4. All operators must provide proof of compliance with all zoning, land use and tax laws.  Our concern here is in providing positive proof of compliance – how do you prove you are legal in every regard.  The Counties have no system to accommodate this.
  5. Failure to comply with any tax or zoning law – or commit any act which the county doesn’t like – may result in a fine of $25000.  Failure to respond within 7 days results in a second $25,000 fine.  This is better than the earlier draft which was a Class C Felony (more than one year in prison).  The bill also provides for not only seizure of the property but also all income earned from operating a vacation rental.
  6. The bill also allows counties to phase out all transient accommodation in any zone for any reason.  This is concerning as county councils and the state legislators are very prone to pressure from unions, neighborhood groups, and anyone else who might vote.
  7. An amnesty program which was in an original draft has been deleted.  If people want to come in from the cold, it helps if you hold the door open for them.

RBOAA is actively opposing this bill, but, we need your help.While we know that the bill will pass through the next committee, we want to let the legislators know that there is opposition to this bill.This will help us at the next stage.

Please, sometime before 10 AM, Hawaiian time April 2, 2018,

  1. Go to https://www.capitol.hawaii.gov/submittestimony.aspx
  2. You will need to sign in / create a sign in, and then enter HB2605
  3. At the very least, click on the button which says Oppose.  If you want to write any comments, you can say you support the testimony provided by RBOOA or you can write any comment you want.  Please keep it polite!

SB2922

The Hawaii Teachers union has once again brought forward the Constitutional Amendment to require the TAT to be increased in order to fund education in the State of Hawaii.We saw this one go right to the bitter end last year before ultimately failing so that the TAT could be increased to pay for the Honolulu rail system. It is hard to get a read on the support, or lack thereof, for this bill at the Legislature, but taxing visitors is politically popular in an election year as most of them don’t vote.

There are a couple other bills still being considered.

One would change the way properties owned by non-residents are taxed upon sale.When you sell a property, a percentage of the sales proceeds is withheld until you file your tax returns or other required forms.The rate will go up and the legislators believe this will increase tax revenue. It is just a temporary increase as you get a refund for any overpayment.The proposal is silly, but perhaps looks good to those who don’t understand tax.

Another bill clarifies that all amounts charged to transient vacation rental guests are subject to TAT.It seems some hotels are charging a resort fee but not collecting tax on the resort fee.RBOAA supports the hotels being required to play on a level playing field with vacation rental owners.

Speaking of hotels, they have had seven consecutive years of increased occupancies and increased room rates.Each of the past seven years has broken all historical records.Yet they are very concerned that we are providing competition to them.

2. Fake News

One of the sad truths of our age is that anyone can say anything and with the benefit of social media and under-staffed media outlets, it can be picked up and spread around without any sort of fact checking.

A social housing group in Hawaii did just that recently, releasing a report which said, amongst many other “facts” that 1 in 7 properties in Maui was a vacation rental.  The real number is closer to 1%.  They made similar fake facts about other islands.  Fortunately, they referenced various reports and surveys and even a very quick look at those sources made it clear that their statements were staggeringly untrue – some of the footnotes contradicted the body of the report.  A junior high student would have received a failing grade if he/she had turned in that paper.  Unfortunately, the original fake news story got a lot of play in the mainstream media (including Fox News) before the counties came out and issued comments.  An F for the Appleseed Center.

3. County Update

At RBOAA, we are focused on the state legislature.  We would love to be able to be involved at the county level as well, but, simply put, we need volunteers to take that on.

This isn’t just our normal plea for volunteers.  As we have been saying for many years now, the fight is going to move from the state to the counties.  We are seeing this increasingly become true.  The state is going to be taking some of the TAT revenues it gets and giving it to the counties to enforce their regulations.  So, more and more, the counties are going to play a significant role.

Here is what some our eagle-eyed members have shared with us recently:

Maui recently passed a bylaw which requires a property to be owned for five years before it can be turned into a vacation rental.  We think this only applies to properties which have never been legal vacation rentals in the past and is primarily focused on restricting growth of vacation rentals in residential areas.  Most vacation rentals on Maui are in “resort zones” and would be unaffected by the new rules.

Maui is also creating a new property classification for vacation rentals.  The rate hasn’t been set, but as my place is on Maui, I know that I already pay significantly higher property taxes than an identical property which is not a vacation rental.  [On Maui, one of the lowest property tax rates is actually reserved for hotels.]

We expect all counties will come up with a new property tax classification for short term rentals.

On the Big Island, the county council was considering a regulatory framework around vacation rentals on the island.  The proposal hit a bit of an obstacle, but in general, the proposals were fair and balanced.  Not perfect, but a good starting point.  Hopefully the proposals come back for further reasoned discussion.

On Honolulu, there are proposals to restrict the number of B&B’s in residential neighborhoods.  Also, one condo association in Waikiki is trying to eliminate vacation rentals from their complex, despite a having permitted vacation rentals since it was built.  Sounds like the owners in that complex need to get themselves organized for their next AGM!

Please remember that everyone at RBOAA is a volunteer and is donating their time on top of working regular paying jobs and whatever else they have going on.  These people dedicate countless hours of their personal time to help protect our – and your – investments in Hawaii.

Please show your appreciation to our team by going to the website and clicking on the DONATE button.

Mahalo and Aloha

Neal

February 18, 2018 — Legislative Update

February 19, 2018 Hawaii Rentals Comments Off on February 18, 2018 — Legislative Update

Aloha!

 

In this Edition

 

Legislature Update  — Legislature 2018 Now in Session

The legislature started up again in mid-January and originally about 30 bills were introduced which could affect you.  As predicted, most of them fell away, so it probably good we didn’t bore with the full list a few weeks ago.  And one bill we wouldn’t have mentioned three weeks ago is now top of the list.  The bills which remain are quite concerning, as usual.

SB2963
This bill is the latest iteration of the AirBnB as tax collector bill that we have seen for the past three years.  However, it has mutated into something quite frightening.  How AirBnB can continue to support the bill is a complete mystery.  (If you advertise with AirBnB, you might ask them!)

In a nutshell, SB 2963 includes:

  1. An amnesty program for those who haven’t been totally on-board with their zoning permits, GET and TAT collection and remittance.  We have been asking for this provision for year, so good to see it is finally on the table.
  2. The advertising broker ( i.e. AirBnB) may collect and remit tax on behalf of all advertisers.  However, if they mess up, AirBnB and the owner are jointly and severally liable for all taxes.  So, if AirBnB collects TAT and doesn’t remit it, you are potentially on the hook.  The bill also requires AirBnb to provide details of how many nights were rented, the rates per night, the address and name and number of the local contact – and this information can be made available to the Counties.  The County of Honolulu has been asking for this for years to help detect compliance with their complex permitting requirements.
  3. All operators must provide proof of compliance with all zoning, land use and tax laws.  Our concern here is in providing positive proof of compliance – how do you prove you are legal in every regard.  The Counties have no system to accommodate this.
  4. Failure to comply with any tax or zoning law is considered a Class C Felony (more than one year in prison).  The bill also provides for not only seizure of the property but also all income earned from operating a vacation rental.The bill also allows counties to phase out all transient accommodation in any zone for any reason.

RBOAA is actively opposing this bill, but, we need to warn you that the legislators want this bill to pass and have cleared away a lot of procedural steps to ensure that it does go through.This bill has already cleared the Senate and the next step is to be heard by a House Committee (we don’t know which one or when).

SB2922
The Hawaii Teachers union has once again brought forward the Constitutional Amendment to require the TAT to be increased in order to fund education in the State of Hawaii.We saw this one go right to the bitter end last year before ultimately failing so that the TAT could be increased to pay for the Honolulu rail system.It is hard to get a read on the support, or lack thereof, for this bill at the Legislature, but taxing visitors is politically popular in an election year as most of them don’t vote.

SB2641
This bill requires all local contacts to be real estate agents or brokers.This is the fight we fought a number of years ago.  Frankly, we are surprised that the topic has returned as we have heard no concerns about the local contact requirement since it became law.
Other Bills.

There are a couple other bills still being considered.

One would change the way properties owned by non-residents are taxed upon sale. The original draft displayed a surprising lack of understanding as to how the tax system works and so is currently deep in re-writes. This one may not come back until next year

Another bill clarifies that all amounts charged to transient vacation rental guests are subject to TAT.  It seems some hotels are charging a resort fee but not collecting tax on the resort fee.

We will continue to work with the legislators on your behalf and hopefully any legislation which does pass is fair and balanced.  We have a pretty strong track record over the past 6 years.

Please remember that everyone at RBOAA is a volunteer and is donating their time on top of working regular paying jobs and whatever else they have going on.  These people dedicate countless hours of their personal time to help protect our – and your – investments in Hawaii.

Please show your appreciation to our team by going to the website and clicking on the DONATE button.

Mahalo and Aloha,

Neal and Annette
www.rboaa.org
info@rboaa.org

Call for Volunteers — November 28, 2017 Update

December 8, 2017 Hawaii Rentals Comments Off on Call for Volunteers — November 28, 2017 Update

Aloha

November 28 2017 Member Update

  1. Remember – TAT goes up 1% on January 1, 2018
  2. Call for volunteers!!
  3. County of Hawaii ( Big Island )

TAT Increase
Remember that the TAT rate goes up 1% on January 1, 2018 to pay for the new railway from Honolulu Airport to…well, not to Maui.

Call for Volunteers

As we assemble the team to lead us through the 2018 Hawaii legislative session, we have identified a couple of gaps.

WE NEED YOU TO BE A PART OF THE GOVERNMENT RELATIONS TEAM FOR THE UPCOMING 2018 LEGISLATIVE SESSION.

Over the last couple of months, I have put out numerous requests for volunteers.  Volunteers are the lifeblood of RBOAA – in fact, that is all we are.  There are no employees here.   They have allowed us, over the last six years, to defeat numerous efforts that would have forced many of us to abandon our investments in the Aloha State.

Our government relations coordinator has been critical to what we do.  She has spent countless hours researching and analyzing proposed state laws.  Because of her, RBOAA and our members have been able to provide credible testimony on bills before the state legislature to counterbalance the money and power of entities such as the Hawai‘i Lodging & Tourism Association, unions, and property management companies.

She cannot continue to do this monumental task alone.  She needs assistance and assistants  and is willing to teach volunteers to do research and analysis on our issues.  Without more volunteers (and this means YOU) RBOAA cannot continue to be the positive force working for you that it has been. Our Government Relations team needs assistance from individuals with an understanding of legal concepts.

The Government Relations team would also benefit from individuals who are willing to do internet research.  For example, there are reports from DBEDTS, Hawaii Tourism Authority, etc. that we use to incorporate into our position.  Anyone who is willing to do directed research would be of tremendous help.

RBOAA’s mandate is to represent the interests of vacation rental owners at the State level.  We do not have volunteers who are representing the interests of vacation rental owners at the County levels.  However, as we have been predicting for a few years now, the focus is shifting from the State to the Counties.

If you are interested in helping RBOAA work at the County level, please let us know.

Otherwise, the best we can do is to share information that we gather.  If we become aware of new groups being formed to address the County specific issues, we will provide that information to our members.

And with that – here is some information to share.  Please refer to our website for our newsletter from earlier in November with updates from the counties of Honolulu and Maui.

County of Hawaii

The County of Hawaii currently has little to no regulation concerning vacation rentals, however, there is movement toward some degree of regulation in the County.  We aren’t sure of the details yet, but there could be restrictions on rentals located on agricultural lands and general restrictions in the name of addressing homelessness and affordable housing.  The latter might be addressed through a basic registration system and/or perhaps a property tax change.  Vacation rentals could be restricted to resort zones.

We don’t normally circulate petitions, but in this case, an exception is being made.

https://www.change.org/p/karen-eoff-protect-short-term-rentals-on-hawaii-island

Mahalo and Aloha,

Neal

November 2017 Update

November 14, 2017 Hawaii Rentals Comments Off on November 2017 Update

Aloha!

November 2017 Member — Update

  1. Remember – TAT goes up 1% on January 1, 2018
  2. Call for volunteers with legal background
  3. County of Honolulu
  4. County of Hawaii ( Big Island )
  5. County of Maui

TAT Increase

Remember that the TAT rate goes up 1% on January 1, 2018 to pay for the new railway from Honolulu Airport.

Call for Volunteers

As we assemble the team to lead us through the 2018 Hawaii legislative session, we have identified a couple of gaps.

Our Government Relations team needs assistance from individuals with an understanding of legal concepts.

The Government Relations team would also benefit from individuals who are willing to do internet research. For example, there are reports from DBEDTS, Hawaii Tourism Authority, etc. that we use to incorporate into our position.   Anyone who is willing to do directed research would be of tremendous help.

RBOAA’s mandate is to represent the interests of vacation rental owners at the State level. We do not have volunteers who are representing the interests of vacation rental owners at the County levels. However, as we have been predicting for a few years now, the focus is shifting from the State to the Counties.

If you are interested in helping RBOAA work at the County level, please let us know.

Otherwise, the best we can do is to share information that we gather. If we become aware of new groups being formed to address the County specific issues, we will provide that information to our members.

And with that – here is some information to share.

 

County of Honolulu

RBOAA is watching, but not responding to, four proposals in front of the Honolulu City Council. This except from the Honolulu Star-Advertiser is an excellent summary of the proposals.

Proponents of vacation rentals, who argue they are a positive for the visitor industry and the communities where they operate, want to lift a moratorium on permits and allow for more units to operate legally.

Opponents argue vacation rentals are a blight on residential neighborhoods and contribute to the island’s housing crunch, and they want tighter enforcement of existing laws, including a crackdown on illegal operators.

A bed-and-breakfast unit by definition is rented for less than 30 days by an owner living in the same dwelling.

Transient vacation rentals, TVUs, are other units rented for less than 30 days. The owner does not live in the same dwelling, but TVUs are allowed without permits in resort districts such as Waikiki.

The city stopped issuing permits for both in 1989-90.

Larry Bartley, executive director of Save Oahu’s Neighborhoods, sent an email to supporters urging them to support the two proposals emphasizing enforcement and oppose the two that would permit more vacation rentals.

“These (proposals) are the showdown for our neighborhoods and housing for everyone living (on) Oahu,” Bartley said. Most of the short-term rentals on Oahu “are illegal under Honolulu zoning law and are removing much-needed rental housing from local families.”

Meanwhile, San Francisco-based Airbnb Inc. sent out an email calling for its supporters to push against more restrictions.

“These regulations could end home sharing on Oahu as we know it, by imposing huge fines on individuals who rely on home sharing to make ends meet,” the email said. “These harsh new regulations will pit neighbor against neighbor and encourage intrusive spying by allowing complaints from neighbors to go directly to judicial review.”

Complicated issue

Council members have tried unsuccessfully for decades to find a compromise position on the issue, most recently in 2015 and 2009.

Council Zoning Chairwoman Kymberly Pine said new legislation is needed to curb the growing number of illegal vacation rentals, which are eating into the island’s residential inventory and making it more difficult for the city to tackle the affordable-housing shortage.

“We have to get control of this or no one will be left living here but rich people,” Pine said in a statement. “I am not opposed to grandma and grandpa renting a room or a studio on the property they live on as they are doing that just to survive in Hawaii. However, I am against the turnover of entire homes especially in residential, non-tourist areas (to vacation rentals).”

Councilman Ernie Martin, in a statement, agreed. “There is an opportunity here to get a handle on an industry that is extremely popular but also threatens to negatively impact Oahu’s rental market,” he said.

“We cannot ignore how attractive and convenient this type of accommodation is to our visitors and the owners who host them.”

One idea, Martin said, is to create a separate tax classification for vacation rentals.

“Whatever policy emerges from these deliberations must consider the realities of our housing and rental market and carve out an appropriate place for the business owners and the consumers,” he said.

Council Chairman Ron Menor said he’s not opposed to vacation rentals, because there should be a diversity of accommodations that visitors can use.

But with the mushrooming of illegal vacation rentals, “the Department of Planning and Permitting has been stretched thin in attempting to enforce the law given their limited resources,” Menor said.

He said stronger enforcement would also allow the city to identify owners and operators of illegal vacation rentals who have not been paying taxes and collect lost revenue for the state and city.

SUMMARY OF THE 4 PROPOSALS

Resolution 17-52, introduced by Council Chairman Ron Menor and Councilman Joey Manahan, would impose additional regulations on vacation rentals, as well as new regulations on online marketplace sites for vacation rentals such as Airbnb. The proposal calls for allowing neighbors of vacation rentals to compel the city to enforce violations. The proposal also allows a neighbor to take legal action against violators.

It also calls for “hosting platforms” like Airbnb to submit to the city reports on the addresses and owners of operators advertising on their sites, and bars operators from advertising their rentals by any other method.

Save Oahu’s Neighborhoods supports this proposal while Airbnb opposes it.

Resolution 17-163, introduced by Councilman Ernie Martin, establishes a process for allowing an unspecified but “limited number” of new B&B and TVU permits to be issued.

Save Oahu’s Neighborhoods opposes this proposal.

Resolution 17-164, also introduced by Martin, allows the city to issue a lien against a property whose owner violates TVU or B&B law, requires advertisements of vacation rentals to include the addresses and certificate numbers, and allows for advertisements to be used as evidence against an operator. It also bars a TVU or B&B permit from being transferred via sale of a property.

Save Oahu’s Neighborhoods supports this proposal while Airbnb opposes it.

Resolution 17-301, introduced by Councilman Ikaika Anderson, establishes a process allowing for a limited number of bed-and-breakfast permits, specifically no more than 0.5 percent of all Oahu residential properties, and for each of the nine Council districts no more than one-third of the citywide total allowed.

Save Oahu’s Neighborhoods opposes this proposal.

County of Hawaii

The County of Hawaii currently has little to no regulation concerning vacation rentals, however, there is movement toward some degree of regulation in the County. We aren’t sure of the details yet, but there could be restrictions on rentals located on agricultural lands and general restrictions in the name of addressing homelessness and affordable housing. The latter might be addressed through a basic registration system and/or perhaps a property tax change. Vacation rentals could be restricted to resort zones.

County of Maui

Governments seem addicted to taxes, especially taxes that are easy to increase without spending political capital. This excerpt from the Maui News:

Last week the Maui Finance and Budget committee recommended a bill to the full council that establishes a new property tax category for short-term rentals. Currently, short-term rental permit holders fall in the commercial classification.

Others facing reclassification to the new category include short-term rentals in hotel-zoned areas and condominium units where short-term rentals are allowed. Those owners currently fall in the hotel and resort classification.

Another bill recommended for approval would classify condominium units at their “highest and best use,” which is usually reflected in the property’s zoning, said Scott Teruya, Maui County’s real property tax administrator. This proposed change could affect units being placed into the proposed short-term rental classification because many condominium units are built on properties zoned hotel, are grandfathered in for short-term rental purposes or have received conditional permits to operate short-term rentals.

Those who use their units as their primary residence can claim the homeowner’s exemption and would not be affected by these bills, Teruya said.

Although the budget committee did not set property tax rates in its proposed bills, Tom Croly of the Maui Vacation Rental Association says that, more than likely, taxes would go up for those affected by the changes.

Teruya countered Croly’s comments, saying there are many factors that determine property tax bills, including the rates set by the council, overall property valuation and how much money the county needs in its budget.

Mahalo and Aloha,

Neal

September 9, 2017 — Update

September 10, 2017 Hawaii Rentals Comments Off on September 9, 2017 — Update
Aloha!
Effective January 1, 2018, the Transient Accommodations Tax ( TAT or Hotel Tax ) will increase by 1%  – from 9.25% to 10.25%.  The rate applies to all transient rental accommodations statewide.

The Transient Accommodations Tax is levied upon every operator and plan manager on the gross rental or gross rental proceeds derived from furnishing transient accommodations. Gross rental or gross rental proceeds derived from transient accommodations furnished could be subject to different tax rates depending on the timing of the payments received under the cash basis accounting method and on the outcome of the all events tested under the accrual basis accounting method.

  • Under the cash basis accounting method, gross proceeds from transient accommodations furnished on or after January 1, 2018 will be subject to the 10.25% transient accommodations tax rate if payments are actually or constructively received on or after January 1, 2018.  However, the gross proceeds from the same transactions will be subject to the 9.25% tax rate if the payments are actually or constructively received before January 1, 2018.
  • Under the accrual basis accounting method, gross proceeds from transactions occurring prior to January 1, 2018 will be subject to the 9.25% tax rate if the right to receive such income is fixed under the all events test prior to January 1, 2018, but will be subject to the 10.25% transient accommodations tax rate if the right to receive such income is fixed under the all events test on or after January 1, 2018.

If you have any further questions please free to contact the Department of Taxation Technical Section at (808) 587-1577 or by email at tax.technical.section@hawaii.gov.

The increased tax will be used to pay for the new rail line being constructed from Honolulu airport to Honolulu city center.  I hope guests at my Maui property make good use of the new rail service.

Mahalo and Aloha,

Neal

info@rboaa.org