Hawaiian Holiday Rentals
Renting Out Your Home During the Holidays
The holidays are fast approaching, and perhaps you are heading to the mainland or elsewhere to celebrate with family and friends. There are plenty of people heading to Hawaii to celebrate or enjoy a vacation, and many of them would prefer renting a home rather than staying in a hotel. There’s no question the demand is there, but whether you can rent out your home for the holidays legally depends on where you live.
Where Vacation Rentals are Permitted
On Oahu, vacation rentals are allowed in resort areas. They are also permitted in apartment medium density districts as long as the dwelling is located within 3,500 feet of a resort district. Vacation rentals are also allowed in apartment and resort districts rezoned as part of a master-planned resort community, according to Hawaii Business.
Rentals and Taxes
Keep in mind that if you rent your home out, you are subject to Hawaiian income tax, the Transient Accommodations Tax (TAT) –also called the “hotel room tax” – and the General Excise Tax (GET). By law, any rental to a transient person – such as a tourist –for less than 180 days is subject to these taxes, and that holds true even if you just rent out your home for a weekend.
Currently, the GET rate on gross rental income is 4 percent, although it rises to 4.5 percent if a country surcharge applies. The TAT rate on gross rental proceeds 10.25 percent.
Pricing a Rental
While high taxes may damper your enthusiasm when it comes to renting out your home for the holidays, you can still make a considerable profit at the going rates. Peak season for rentals is December through March, with vacation home occupancy rates nearing 80 percent, and the winter holidays fall neatly into this timeframe.
Of course, how much you can charge for your home depends on various factors, such as size, location and amenities. For a two-bedroom condo near the ocean, you might fetch $300 per night. A larger home able to accommodate parties of eight or more might reach $1,000 per night, with a true luxury home bringing in weekly rates in the tens of thousands of dollars. Even with taxes, a two-week holiday rental can provide you with substantial extra income.
Renting Out Legally
There is no question the number of illegal vacation home rentals on Oahu is quite high, and no new permits for transient vacation units (TVUs) have been issued in years. A new law passed in June, 2019, toughens enforcement of Oahu vacation rental laws. If you are not legally permitted to rent out your home, avoid the temptation to break the law. Getting caught advertising an illegal vacation rental can subject you to a $10,000 fine.
Contact Us
If you’re looking to buy or sell a home or find a rental property, you need a knowledgeable, experienced realtor familiar with all aspects of the Hawaiian real estate market. Contact Island Realty Group LLC at 808-689-7407 or IslandRealtyGroup@irghi.com.
