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New Transient Accommodations Rules for Owner Operators in Hawaii

As many property owners may be aware, there has been some new rules regarding renting your vacation rental. Many owners who own vacation rental condos have heard many myths and some factual information over the past couple of years on the new Transient Accommodations rules, as it was being developed.  

Transient Accommodations Rules Myth

The most common myth I have heard is that if you live off island and own a vacation rental condo, you will be required to hire a property management company on the island that the condo is on. This is far from the truth. Many owners who rent their condos on their own through websites like VRBO went into panic mode. But as I said, that is a myth. The rules are really not as intimidating as it may sound.

What is the Reason for New Transient Accommodation Rules?

The primary reason for this addition to the rules was because of the concern by the State of Hawaii to collect the Hotel taxes (TAT-transient accommodations taxes) when you do rent it out on your own. The state also wanted to make sure that there was someone on island to be an emergency contact for your guests.

When Do You Need to Collect These TAT?

Anytime you rent out accommodations for less than 6 months is considered short term and you need to collect not only the TAT, but also the GET (General Excise Tax). If you rent out a dwelling for 6 months or longer then you only need to collect the GET.  

These taxes I am talking about are taxes that you collect from the renters, then you pass it on to the State of Hawaii. So there is no expense to the owner, just a little extra paperwork when you pass it on. There is a one time license fee of $25.00

New Transient Accommodations Rules for Hawaii

These new rules are effective 7-1-2012. The following information was taken from the State of Hawaii Department of Taxation Announcement No. 2012-13. The Act requires operators of transient accommodations to do the following:

1.) Designate a local contact residing on the same island as the property.

2.) Provide the local contacts information to any entity with covenants, bylaws, or administrator (AOAO-Association of Apartment Owners) and (HOA-Home Owners Associations).

3.) Include the local contact name and phone number in any contract or written rental agreement.

4.) Provide on a website or by online link and display in all advertisements and solicitations on websites the registration identification number issued under HRS 237D-4, also known as the Transient accommodations tax license number

This act also requires the associations of condos to collect from the owners and to provide to the department of taxation the relevant information related to operators leasing transient accommodations on its property.

The relevant information includes the operators name, address, contact information, registration identification number (TAT license number), and website address if advertising or soliciting the transient accommodations on the Internet. This is to be provided once a year or within 60 days of each change.

Overview

So in a nutshell, if you are going to rent on your own:

  1. Get your TAT and GET license
  2. Hire an on island agent
  3. Document your TAT and GET license number in any advertising
  4. Provide the on island agent information to your guests in any contracts
  5. Provide your on island agent information to your association if your property belongs to one

The Department will provide a transition period to allow taxpayers to meet the requirements of this Act. No penalties will be imposed on taxpayers who fail to provide to the Department before April 1, 2013 relevant information related to operators leasing transient accommodations on their property.

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Jeremy Stice

November 25, 2012

Mahalo for sharing this informative post Heidi. There was a lot of confusion and panic regarding the passing of this new legislation and I am glad that you have summed it up so concisely.

Jeremy Stice

November 25, 2012

Mahalo for sharing this informative post Heidi. There was a lot of confusion and panic regarding the passing of this new legislation and I am glad that you have summed it up so concisely.

Ken Molina, RS

November 27, 2012

Lots of good information here. Thanks for clarifying things up for us!

Ken Molina, RS

November 27, 2012

Lots of good information here. Thanks for clarifying things up for us!

Cate McCann Fleming

November 30, 2012

This is all very helpful. Thank you for consolidating this information…there has been some confusion, indeed. Mahalo Heidi!

Cate McCann Fleming

November 30, 2012

This is all very helpful. Thank you for consolidating this information…there has been some confusion, indeed. Mahalo Heidi!

Grover Oakerman

May 21, 2013

Heidi in the myth section you state that you don’t need to hire a property management company. In the overview section you say to hire an agent. What’s the difference?

Heidi Farmer

May 22, 2013

The State of Hawaii has a newer law that requires you have an “on island agent” or emergency contact on island if the owner does not live there. They do not need to be a licensed property manager or real estate agent. It is for the protection of the guest in case they have an emergency, they have a contact person.

Grover Oakerman

May 21, 2013

Heidi in the myth section you state that you don’t need to hire a property management company. In the overview section you say to hire an agent. What’s the difference?

Heidi Farmer

May 22, 2013

The State of Hawaii has a newer law that requires you have an “on island agent” or emergency contact on island if the owner does not live there. They do not need to be a licensed property manager or real estate agent. It is for the protection of the guest in case they have an emergency, they have a contact person.

Yvonne Jaramillo Ahearn

August 14, 2013

Heidi – This is a little misleading. Your online agent must be a licensed real estate salesperson or broker UNLESS the agent is “an employee” (not an independent contractor) of the entity or person for whoe they are managing the property AND that agent manages properties only for that one entity or person. So a non-licensed agent/property manager can manage a property for only one owner and that includes themselves. This leaves a lot of so called unlicensed agents and their probably unknowing property owners in violation of the law because they are managing multiple properties for multiple owners, or even if for only one owner/investor, if they are not an employee but are a contractor. Sorry if that is confusing, but unless your friend or family member is managing your property for you and manages property for no one else, they are probably in violation of the law.

Heidi Farmer, R(B)

March 5, 2014

Aloha Yvonne,
Thank you for reading. This article was geared to owners telling them to get their tax license and being sure they report their license if they rent by owner. This information is from the Hawaii Department of Taxation, and was written in 2012. Since that time there has been further interpretation of this law by the Hawaii Board of Realtors and the Real Estate Commission on the definition of the on island agent. Sounds like it is time for an update.
Mahalo

Yvonne Jaramillo Ahearn

August 14, 2013

Heidi – This is a little misleading. Your online agent must be a licensed real estate salesperson or broker UNLESS the agent is “an employee” (not an independent contractor) of the entity or person for whoe they are managing the property AND that agent manages properties only for that one entity or person. So a non-licensed agent/property manager can manage a property for only one owner and that includes themselves. This leaves a lot of so called unlicensed agents and their probably unknowing property owners in violation of the law because they are managing multiple properties for multiple owners, or even if for only one owner/investor, if they are not an employee but are a contractor. Sorry if that is confusing, but unless your friend or family member is managing your property for you and manages property for no one else, they are probably in violation of the law.

Heidi Farmer, R(B)

March 5, 2014

Aloha Yvonne,
Thank you for reading. This article was geared to owners telling them to get their tax license and being sure they report their license if they rent by owner. This information is from the Hawaii Department of Taxation, and was written in 2012. Since that time there has been further interpretation of this law by the Hawaii Board of Realtors and the Real Estate Commission on the definition of the on island agent. Sounds like it is time for an update.
Mahalo

RJ

August 23, 2013

Heidi,

Can a short term renter in HI verify the TAT number and that it’s consistent with the owner info and property address for a property listed on VRBO, for example?

Is there an online database the State of HI has?

Thanks

RJ

August 23, 2013

Heidi,

Can a short term renter in HI verify the TAT number and that it’s consistent with the owner info and property address for a property listed on VRBO, for example?

Is there an online database the State of HI has?

Thanks

Heidi Farmer, R(S)

August 25, 2013

HI RJ
Yes if you go to the below address you can put in the number, (the space after the “W”) that was provided to you to check it.

https://dotax.ehawaii.gov/tls/app

Heidi Farmer, R(S)

August 25, 2013

HI RJ
Yes if you go to the below address you can put in the number, (the space after the “W”) that was provided to you to check it.

https://dotax.ehawaii.gov/tls/app

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