Avalara MyLodgeTax > Blog > Lodging Taxes > North Shore enters the fray on short-term vacation rental laws

North Shore enters the fray on short-term vacation rental laws

  • Jan 19, 2018 | MyLodgeTax

As the debate over short-term vacation rentals in Hawaii heats up, North Shore residents and leaders are jumping into the fray, arguing short-term rentals contribute to decreased housing stock and neighborhood disruption.

According to Todd Nacapuy, the state’s chief information officer and a North Shore resident, a recent search turned up more than 1,000 North Shore houses listed on vacation-rental websites Airbnb and VRBO; that means 1,000 fewer affordable homes available to residents.

As Honolulu has appointed a task force to study the issue, City Council Zoning and Housing Committee Chair Kimberly Pine asserts she wants to fight illegal vacation rentals and would like to look into condo hotels as an alternative.

Meanwhile, efforts to permit Airbnb to collect lodging taxes from its Hawaii bookings are ongoing. State legislation to allow Airbnb to automatically collect taxes from its listings has failed in the past two legislative sessions, although Governor David Ige and Airbnb are in negotiations on an agreement. A deal with Airbnb would likely give the state a big boost in lodging tax revenues.

However, North Shore Neighborhood Board Chair Kathleen Pahinui is opposed to a state deal with Airbnb and other rental sites for tax collection. She believes this kind of arrangement would encourage short-term rentals — most of which are now illegal — even if city or county laws disagree.

As it stands now, individual short-term rental operators are responsible for collecting lodging taxes from their guests and passing them on to the state. A new, higher rate for Hawaii’s Transient Accommodation Tax, now 10.25 percent, went into effect on Jan. 1. In Honolulu, that means a total lodging tax rate of 14.95 percent, including the state’s general excise tax.

While no concrete action has been taken yet to tighten short-term vacation rental laws or lodging tax collection, the increased debate indicates that change will come to the industry in Hawaii. North Shore short-term vacation rental owners need to stay aware so they can keep up with shifts as they happen.

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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