“As a realtor here on Maui, working primarily in resort areas, the most frequently asked questions I encounter are ‘can I vacation rent this property when I’m not using it?’ and, if so, ‘can I manage the property myself on a website like VRBO or AirBnB?'”.
Kapalua Golf Villas. Photo Courtesy Island Sotheby’s International
Courtney Brown, Vice President at Island Sotheby’s International Realty says it depends. “It isn’t always straightforward, as there are several factors to consider that may govern the use of the property as a short term Transient Vacation Rental, including, but not limited to, state laws and statutes, Maui county zoning rules and regulations, and CC&R’s (Declaration of Covenants, Conditions, and Restrictions).”
Transient/Short Term/Vacation Rental Facts
For the purpose of the information below, “Transient Vacation Rental” or “TVR” is used interchangeably with the terms short term rentals and vacation rentals.
Q: What is a Transient Vacation Rental (TVR)?
A: Per Maui County’s website, a TVR is any rental of a housing unit for less than 180 days.
The Maui County Code Chapter 19.37 prohibits transient vacation rentals outside of the hotel district.
Q: What if the property I’m considering does not fall under Maui County’s Code’s Hotel District? Can I still rent it short term as a TVR?
A: Per the Maui County TVR FAQ webpage: “an estimated 16,000-plus TVRs may operate legally in the County, many in multi-unit buildings, along with several hundred single family units. They operate legally because they are in an approved zoning district (hotel, business, historic, etc). Those that are not in approved districts and are operating legally, have applied for and received a “conditional permit” that is required to conduct a vacation rental business in a residential, rural or agricultural zoned district.”
Under the Minatoya Opinion and per the current county code (County Code Chapter 19.12.20), TVRs of condominiums are permitted in apartment zoning if the permits for the building were lawfully issued by and valid on April 20, 1989.
For a single family and/or ohana home in the Apartment, Residential and Agricultural districts, an owner would have to apply for and gain approval for one of the following in order to use the property as a TVR:
B&B Permit (County Code Chapter 19.64), per the zoning ordinances, the owner/proprietor of a B&B shall be a resident of the County and shall reside, on a full-time basis, on the same lot being used as the bed and breakfast home.
Short Term Rental Home (STRH) Permit (County Code Chapter 19.65). It should be noted that short term rental home permits are subject to a variety of conditions and are currently non-transferrable.
Conditional Use Permit: Outside of the above zoning districts, there are short-term rentals that have received approval to operate with a Conditional Permit.
Q: Can I manage a vacation rental or long term rental property myself? Can a relative or an employee manage the property for me?
A: An owner can manage their vacation rental or long term themselves, but they must be on island to do so. If the owner(s) are not on island, they do need to provide their renters with a Local Contact and/or managing agent, who resides on island.
Per Hawaiʻi Landlord Tenant Code, Chapter 521, “An absentee landlord shall designate an agent to act on the landlord’s behalf. The agent must reside on the same island as the rental unit.” Per the DCCA, the designated on-island agent must be licensed if engaging in any activity for which a real estate license is required or manages property for more than one owner.
Q: Is a landlord obligated to collect General Excise Tax (GET) and Transient Accommodations Tax (TAT)?
A: Yes. The landlord must collect and pay GET and TAT per the Revised Statute 237.
Q: When advertising a vacation rental online, are there any requirements?
A: Yes, enter Act 204 in 2016 and requirements relating to providing the registration, tax ID and provide the Local Contact information. In addition to helping to ensure owners of transient vacation rental properties collect and pay the appropriate taxes, it also helps consumers investigate whether an online rental advertisement is real or fraudulent and provides a contact in case of an emergency at the property.
Per the website for the Governor of the State of Hawaiʻi, Act 204: “authorizes DOTAX to enforce civil penalties for operators and plan managers who fail to display the certificate of registration and registration ID numbers for transient accommodations and resort time share vacation plans. Authorizes DOTAX to issue citations for failure to provide the registration identification number or link to the number and the contact information of the local contact in an advertisement for a transient accommodation or resort time share vacation plan.”
Q: Does operating a TVR affect my property tax rate?
A: Yes. Read more on Maui County Property Taxes: assessments and rates
Q: Any other comments?
A: When purchasing real estate, it is always advised to consult with the appropriate legal and tax professionals.
If considering a property that would be used as a TVR and not living on island, it is recommended to speak with and interview licensed professional management companies. There are sometimes on-site rental management offices, as well as independent real estate companies that specialize in management of transient vacation rentals.
If you are considering purchasing a property here on Maui to use as a Transient Vacation Rental (TVR), you should be sure to check on the current state and county zoning laws, rules and regulations, and tax laws, as well as the Residential Landlord-Tenant Code. Per the Maui County website, there are proposed legislative bills that may change the permitting process, requirements and areas.
Information in this post is taken from the Maui County website and the Maui County Municipal Code website. Landlord Tenant Code and Short Term Rentals/Taxation are addressed in chapters 237, 467, and 521 of the Hawaiʻi Revised Statutes
Maui County Codes: Chapter 19 Zoning Ordinances and Permitted Uses
Maui Real Property Tax Assessments: search properties
Maui County: Real Property Division
Act 204
Short Term Rental Permit Information
Brochure Renting Residential, April 2016
Brochure Transient Accommodations April, 2016
The original article was posted on May 15, 2017.
