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What would Hawaii deal with Airbnb mean for vacation rental owners?

  • Nov 15, 2017 | MyLodgeTax

Hawaii Airbnb

Airbnb and Hawaii Governor David Ige are in talks about a private agreement that would set terms for the online rental platform to collect lodging taxes in the state. For vacation rental owners in Hawaii who list their rental properties with Airbnb, such an agreement would mean that Airbnb would automatically collect any state lodging taxes due from guests. For the state, it could generate $30 million a year in tax revenue.

In Hawaii, rental income — including income from renting out private rooms and vacation homes — is subject to a 9.25 percent transient accommodations tax (TAT), as well as a 4 percent general excise tax (GET). An extra GET surcharge of .05 percent applies to rental income in Oahu. Rental hosts can pass these taxes on to their guests, but each tax must be listed separately on the accommodations bill, and the host must collect the taxes and remit them to the proper tax authorities.

A tax collection agreement between the governor’s office and Airbnb would allow Airbnb, rather than its vacation rental owner customers, to collect and file state taxes on Airbnb accommodations. However, vacation rental owners would still be responsible for all taxes due. That means they would still be required to collect and file taxes due for rentals made through listing sites other than Airbnb. They would also need to take care of any lodging taxes not covered by the state agreement.

If Airbnb were to make an agreement with the state, but not Oahu, for example, it could be possible that Airbnb would only collect lodging taxes for the state, but that rental owners in Oahu could be on their own when it comes to collecting the Oahu surcharge tax.

Mike McCartney, Ige's chief of staff, said if the deal is reached, it would be one part of a collection system that could also eventually include state and county regulation and enforcement.

Earlier this year, Airbnb supported two legislative measures that would have made it possible for Airbnb and other online rental platforms to register as tax collection brokers for state lodging taxes, but neither bill passed. In 2016, a similar bill was vetoed by Ige.

Some observers have criticized the current negotiations for being done behind closed doors, while others see it as a positive step toward a more efficient tax collection.

Either way, it’s clear that such negotiations are on the rise. Airbnb has aggressively pursued agreements with governments to collect lodging taxes on behalf of its customers. It has tax remittance deals in place in more than 350 jurisdictions worldwide, according to Airbnb policy manager Matt Middlebrook.

Even if Airbnb may soon be collecting lodging taxes in your area, it’s important to remember that it may only be collecting a portion — and as the host, you’re still responsible for any taxes Airbnb isn’t handling on your behalf, as well as taxes on bookings made through other platforms.

Visit our Guide to Hawaii Vacation Rentals if you have any further questions about managing taxes for your Airbnb rental.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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At Avalara MyLodgeTax, we provide the fastest and easiest way for short-term and vacation rental property owners to comply with their lodging or occupancy tax requirements. We manage your lodging taxes so you don't have to and guarantee your compliance — period. If we make a mistake, we'll fix it at no cost to you. No contracts, no obligation, no worries. Never worry about lodging taxes again. Contact us at MyLodgeTax@Avalara.com.