Hawaii Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Hawaii?

Short-term rental regulations in Hawaii vary by island and county, with each local government setting its own zoning laws and ordinances to govern the operation of vacation rentals. These regulations aim to balance the needs of the tourism industry with the preservation of residential communities and the availability of long-term housing for locals.

Starting a Short-Term Rental Business in Hawaii

Before starting a short-term rental business in Hawaii, it's crucial to research the specific regulations and zoning laws that apply to your property's location. Each island has its own set of rules, and failure to comply can result in significant fines and legal consequences.

On Oahu, short-term rentals are only permitted in resort-zoned areas and specific apartment-zoned areas. Property owners must obtain a license from the City and County of Honolulu, which involves meeting requirements such as obtaining a non-conforming use certificate, complying with safety regulations, and paying necessary fees.

Maui County has strict zoning laws that limit short-term rentals to specific areas, such as the Visitor Destination Areas on Kauai and designated hotel and commercial zones on the Big Island. Prospective hosts must navigate this comprehensive legal landscape to ensure compliance and successful operation.

It's important to note that paying Transient Accommodation Taxes (TAT) and General Excise Taxes (GET) on short-term rental transactions does not excuse noncompliance with local zoning laws. Properties can only be advertised for unhosted rentals of less than 30 days if they hold a valid nonconforming use certificate (NUC).

When considering starting a short-term rental business in Hawaii, it's essential to weigh the potential impact on the community and local housing market. Some argue that vacation rentals can limit housing supply for locals, while others believe that responsibly managed short-term rentals can benefit local economies and provide income opportunities for residents.

Short-Term Rental Licensing Requirement in Hawaii

In Hawaii, short-term rental licensing requirements vary by county. Each county has its own set of regulations and processes for obtaining a license to operate a short-term rental. Here's a comprehensive overview of the licensing requirements for the major counties in Hawaii:

Maui County

Maui County requires a Short-Term Rental Home (STRH) permit for properties operating as short-term rentals. The requirements include:

• Completed STRH permit application
• Notarized owner certification form
• Zoning and flood confirmation form
• Site and floor plans
• Neighbor notice of filing
• Property tax compliance documentation
• Government-issued identification
• Proof of property insurance
• House rules
• Fire escape plan

To submit these requirements, applicants must use the Maui Automated Planning and Permitting Solution (MAPPS) online system. The initial application fee is set in the annual budget ordinance, and applicants are notified when payment is due.

The processing time for STRH applications can take several months. It's crucial to ensure that the application is complete and all requested information is included to avoid delays5.

Honolulu (Oahu)

In Honolulu, short-term rental operators need to obtain a license from the City and County of Honolulu. The requirements include:

1. Non-conforming use certificate (if applicable)
2. Detailed site plan
3. Proof of ownership
4. Description of proposed use
5. Fire safety plan
6. Noise mitigation plan
7. Proof of insurance

Applications should be submitted to the Department of Planning and Permitting. The licensing process can be lengthy and requires significant documentation.

Honolulu has specific tax requirements for short-term rentals. Operators must register with the state's Department of Taxation and pay both the Transient Accommodations Tax (TAT) of 10.25% and the General Excise Tax (GET) of 4% on gross rental proceeds.

Hawaii County (Big Island)

Hawaii County requires a Short-Term Vacation Rental (STVR) registration for properties operating as short-term rentals. The requirements typically include:

1. Completed STVR registration form
2. Site plan
3. Floor plan
4. Parking plan
5. Proof of property tax compliance
6. Proof of insurance
7. Local contact information

Applications should be submitted to the Hawaii County Planning Department. The processing time and fees may vary, so it's best to check with the department for the most current information.

Kauai County

Kauai County requires a Transient Vacation Rental (TVR) certificate for properties operating as short-term rentals. The requirements typically include:

1. Completed TVR application
2. Site plan
3. Floor plan
4. Parking plan
5. Proof of property tax compliance
6. Proof of insurance
7. Local contact information

Applications should be submitted to the Kauai County Planning Department. The processing time and fees may vary, so it's advisable to check with the department for the most up-to-date information.

Fines and Penalties

Operating a short-term rental without the proper license can result in significant fines and penalties. In Honolulu, for example, the minimum fine for illegal advertising is $1,000, and the maximum fine is $10,000. Fines are assessed on a daily basis and can accumulate quickly if the violation is not promptly addressed.

It's important to note that paying Transient Accommodation Taxes (TAT) and General Excise Taxes (GET) does not exempt property owners from complying with local zoning laws and obtaining the necessary permits.

Given the complexity of short-term rental regulations in Hawaii and the potential for significant fines, it's crucial for property owners to thoroughly research and comply with their specific county's requirements before operating a short-term rental.

Required Documents for Hawaii Short-Term Rentals

The required documents for short-term rentals in Hawaii vary by county. Here's a comprehensive list of the typically required documents across the major counties:

1. State of Hawaii General Excise Tax (GET) License: This is required for all businesses in Hawaii, including short-term rentals. It can be obtained from the Hawaii Department of Taxation.
2. State of Hawaii Transient Accommodations Tax (TAT) License: This is specific to short-term rental operators. It's also obtained from the Hawaii Department of Taxation.
3. County Transient Accommodations Tax License: Some counties, like Honolulu, require a separate county-level TAT license.
4. Title Report: A recent title report is often required to prove ownership of the property.
5. Proof of Insurance: Evidence of commercial general liability insurance, typically with coverage of at least $1,000,000.
6. Informational Binder: This includes house rules, safety information, and local contact details.
7. Zoning Confirmation: A form confirming the property's zoning and flood status, usually obtained from the county planning department.
8. Site Plan: A detailed plan showing the layout of the property, including parking spaces.
9. Floor Plan: A layout of the interior spaces to be used for short-term rental.
10. Proof of Property Tax Compliance: Documentation showing that property taxes are paid and up to date.
11. Neighbor Notification: Proof that neighbors within a certain distance have been notified of the short-term rental operation.
12. Fire Safety Plan: A plan detailing fire safety measures and evacuation routes.
13. Noise Mitigation Plan: A plan outlining measures to reduce noise and prevent disturbances.
14. Local Contact Information: Details of a local contact who can respond to issues within a specified timeframe.
15. Statement of Compliance: A signed statement confirming compliance with all applicable laws and regulations.
16. Home Exemption Proof: For bed and breakfast operations, evidence of a real property home tax exemption.
17. HOA Approval: If applicable, confirmation that the short-term rental is permitted by the homeowners association.
18. Building Code Compliance: Proof of compliance with local building, plumbing, and electrical codes.

These documents are typically submitted to the respective county planning departments as part of the short-term rental permit or registration process. The exact requirements and submission process may vary by county, so it's essential to check with the specific county's planning department for the most up-to-date information.

Remember, operating a short-term rental without the proper permits and documentation can result in significant fines and penalties. It's crucial to ensure all required documents are in order before beginning operations.

Hawaii Short-Term Rental Taxes

Short-term rental operators in Hawaii are subject to several state and county taxes. Understanding these taxes is crucial for compliance and profitability. Here's a breakdown of the key taxes that apply to short-term rentals in Hawaii:

General Excise Tax (GET)

The General Excise Tax (GET) is a statewide tax on business activity in Hawaii. It applies to the gross income received by the person engaging in the business activity, including short-term rentals3. The current GET rate for short-term rental businesses is 4% statewide, with an additional 0.5% surcharge in certain counties like Honolulu, resulting in a total GET rate of 4.5%.

Transient Accommodations Tax (TAT)

The Transient Accommodations Tax (TAT) is a state tax on short-term rentals, defined as stays of less than 180 consecutive days. As of 2020, the TAT rate is 10.25% of gross rental proceeds, which include mandatory resort fees, maintenance fees, cleaning fees, and management fees46. TAT is one of the highest lodging tax rates in the United States.

County Transient Accommodations Tax

In addition to the state TAT, some counties in Hawaii levy their own transient accommodations tax. For example, the City and County of Honolulu imposes a 3% Oahu Transient Accommodations Tax (OTAT) on top of the state TAT. Short-term rental operators registered with the state for TAT purposes are automatically registered for OTAT and do not need to register separately with the county.

Property Taxes

Short-term rentals in Hawaii are often subject to higher property tax rates compared to long-term residential properties. In Maui County, for instance, the property tax rate for transient vacation rental properties is $11.85 per $1,000 of assessed value, which is nearly $10 higher than the rate for owner-occupied residential properties. Property tax rates and classifications for short-term rentals vary by county.

Possible Deductions and Write-Offs

Short-term rental operators in Hawaii may be eligible for certain tax deductions and write-offs to help offset their tax liabilities. Based on federal regulations, hosts who rent out their property for a minimum of 14 days per year and use it for personal purposes for no more than 14 days annually can deduct various business expenses, such as:

1. Mortgage interest
2. Mortgage insurance premiums
3. Property taxes and other taxes
4. Depreciation
5. Property maintenance and utilities
6. Supplies provided to guests
7. Cleaning, accounting, legal, and other business service fees
8. Travel costs related to managing the property
9. Home office expenses

It's important to consult with a tax professional to determine which deductions apply to your specific situation and to ensure proper documentation and reporting.

In summary, short-term rental businesses in Hawaii are subject to GET (4-4.5%), state TAT (10.25%), and potentially county TAT (e.g., 3% in Honolulu), in addition to higher property tax rates in some counties. However, operators can take advantage of various tax deductions to help manage their tax obligations. Compliance with these taxes is essential to avoid penalties and maintain a successful short-term rental business in Hawaii.

Does Hawaii Strictly Enforce STR Rules?

Hawaii has been cracking down on illegal short-term rentals, with counties issuing significant fines to violators. However, enforcement varies by island, and many hosts continue to operate under the radar despite the strict regulations.

On Oahu, the City and County of Honolulu have been actively enforcing short-term rental laws. A federal judge recently ruled that existing short-term rentals outside resort zones can continue their operations and advertising of rentals for stays of 30 to 89 days. This ruling allows existing short-term rentals to operate under the 30-day minimum rule, but it doesn't apply to any short-term rentals that opened after the ordinance was put in place.

Despite the regulations, many hosts on Oahu continue to operate their short-term rentals, often avoiding detection by city officials. Some hosts have reported successfully operating without a license by listing their properties on platforms that do not require one, such as Facebook Marketplace or Craigslist.

On the Big Island, short-term vacation rentals (STVRs) are only permitted in specific districts and require registration with the Planning Department. However, enforcement of these rules has been inconsistent, with many illegal rentals still in operation.

Compared to other states, Hawaii is not particularly Airbnb-friendly due to its strict regulations and the pressure from the hotel industry to limit short-term rentals. The state has some of the most restrictive short-term rental laws nationwide.

Despite the challenges, many hosts continue to operate short-term rentals in Hawaii, driven by the potential for significant revenue. On Reddit and Bigger Pockets, hosts have expressed mixed feelings about the regulations, with some criticizing the strict rules and high fees while others praise the efforts to crack down on illegal rentals.

In summary, while Hawaii does have strict short-term rental regulations, enforcement varies by island, and many hosts continue to operate despite the rules. The state is not particularly Airbnb-friendly compared to other cities, but the potential for profit keeps many hosts in the market, navigating the complex legal landscape to maintain their businesses.

How to Start a Short-Term Rental Business in Hawaii

Starting a short-term rental business in Hawaii can be a lucrative venture, but it requires careful planning and compliance with various regulations. Here's a step-by-step guide to help you get started:

Research local regulations: Before investing in a property or listing your existing home, thoroughly research the short-term rental regulations in your specific county and zone. Each island has its own set of rules, and violations can result in significant fines. Consult with local authorities, such as the county planning department, to ensure you understand the requirements.

Obtain necessary permits and licenses: Once you've confirmed that your property is eligible for short-term rental use, apply for the required permits and licenses. This may include a short-term rental permit, a general excise tax (GET) license, and a transient accommodations tax (TAT) license. Be prepared to provide detailed documentation, such as a site plan, floor plan, and proof of insurance.

Prepare your property: Ensure your property meets all safety and health standards, including fire safety requirements, building codes, and occupancy limits. Invest in quality furnishings, linens, and amenities to create a welcoming and comfortable space for your guests. Consider hiring a professional photographer to capture high-quality images of your property for your listing.

Create a comprehensive listing: Develop a detailed and accurate listing that showcases your property's unique features and amenities. Include information about the neighborhood, nearby attractions, and house rules. Be transparent about any limitations or potential drawbacks to manage guest expectations.

Set competitive rates: Research the rates of similar properties in your area to ensure your pricing is competitive. Consider factors such as seasonality, events, and demand when setting your rates. Utilize dynamic pricing tools to automatically adjust your rates based on market conditions.

Establish a reliable cleaning and maintenance system: Cleanliness is crucial in the short-term rental industry. Develop a thorough cleaning checklist and hire a reliable cleaning service to ensure your property is consistently guest-ready. Establish a maintenance schedule to address any repairs or upgrades promptly.

Provide excellent customer service: Respond promptly to guest inquiries and maintain open communication throughout the booking process. Offer local recommendations and be available to address any concerns or issues that may arise during their stay. Encourage guests to leave reviews and respond to feedback professionally.

Comply with tax obligations: Short-term rental operators in Hawaii are required to pay general excise tax (GET) and transient accommodations tax (TAT). Register with the Department of Taxation and ensure you are collecting and remitting these taxes as required. Keep accurate records of your income and expenses for tax purposes.

Monitor your performance: Regularly review your occupancy rates, revenue, and guest feedback to identify areas for improvement. Adapt your strategies as needed to optimize your performance and maintain a competitive edge in the market.

Stay informed and connected: Keep up with any changes in short-term rental regulations and join local host communities or organizations to stay informed and share best practices. Building relationships with other hosts and industry professionals can provide valuable insights and support as you navigate the challenges of running a short-term rental business in Hawaii.

By following these steps and remaining compliant with local regulations, you can establish a successful short-term rental business in Hawaii. Remember to prioritize guest satisfaction, maintain a high-quality property, and adapt to the ever-changing market conditions to ensure long-term success.

Who to Contact in Hawaii about Short-Term Rental Regulations and Zoning?

For the most up-to-date information on short-term rental regulations and zoning in Hawaii, it's best to contact the relevant authorities in each county:

Honolulu (Oahu)

Contact the City and County of Honolulu Department of Planning and Permitting (DPP) for questions about short-term rental regulations and zoning on Oahu:

1. Phone: (808) 768-8000
2. Email: info@honoluludpp.org
3. Website: www.honoluludpp.org

The DPP's website provides detailed information on the short-term rental registration process, required documents, and frequently asked questions.

Maui County

For information on short-term rental regulations in Maui County, contact the Department of Planning:

1. Phone: (808) 270-8205
2. Email: planning@mauicounty.gov
3. Website: www.mauicounty.gov/1127/Short-Term-Rental-Home-STRH-Permit

The Maui County website offers a comprehensive application packet for Short-Term Rental Home (STRH) permits, which includes detailed requirements and instructions.

In addition to contacting the relevant authorities, hosts can find valuable information and support from local organizations and online communities:

Oahu Short-Term Rental Alliance (OSTRA)

OSTRA is a non-profit organization that advocates for fair and reasonable short-term rental regulations on Oahu. Their website (ostra.org) provides updates on regulations, FAQs, and resources for hosts.

BiggerPockets Honolulu Short-Term Rental Forum

The BiggerPockets forum has a dedicated section for discussing short-term rentals in Honolulu (www.biggerpockets.com/forums/530/topics/1066055-short-term-in-hawaii). Hosts share their experiences, ask questions, and provide advice on navigating local regulations.

By contacting the relevant authorities and engaging with local host communities, short-term rental operators in Hawaii can stay up-to-date on the latest regulations and get the support they need to run compliant and successful businesses.

What Do Airbnb Hosts in Hawaii on Reddit and Bigger Pockets Think about Local Regulations?

Airbnb hosts in Hawaii have shared their experiences and opinions about local short-term rental regulations on various online platforms. Here are some insights from Reddit and Bigger Pockets:

Reddit - r/Hawaii

In a thread titled "As locals, how do you feel about the restrictions on short term rentals?", hosts and residents discussed the impact of regulations:

1. One host commented: "I am 100% in favor of the restrictions on transient vacation rentals. I'd like there to be stronger enforcement measures and I also hope they further amend the laws to require minimum 180 day rentals for leases. Neighborhoods that were intended to be residential neighborhoods should not have mini hotels in them."
2. Another user shared: "Its abused here. Greedy, lazy folks max out in their bnb traffic and fuck the neighbors. Most of the cheap assholes who utilize these accommodations are entitled and inconsiderate. Want to party all night and be loud? Waikiki is better for that than my quiet street."

Bigger Pockets - Hawaii Real Estate Forum

In a thread discussing short-term rentals in Hawaii, several hosts expressed their concerns:

• One investor wrote: "The regulations are making it increasingly difficult to operate short-term rentals in Hawaii. I've had to switch some of my properties to long-term rentals, which has impacted my income."
• Another host shared: "I've been operating a legal short-term rental on Maui for years, but the constant changes in regulations are making it challenging to plan for the future. It's becoming less attractive as an investment option."

These discussions highlight the mixed feelings among hosts in Hawaii. While some support stricter regulations to preserve neighborhoods and housing for locals, others find the rules overly restrictive and challenging for their businesses. Many hosts emphasize the importance of staying informed about local laws and operating legally, despite the high costs and complex processes involved.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each area and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.