Avalara MyLodgeTax > Blog > State and Local News > Voters weigh in on short-term rental issues in Maui, California, and Maine

Voters weigh in on short-term rental issues in Maui, California, and Maine

  • Nov 12, 2018 | Jennifer Sokolowsky

Maui beach


Maui County voters have approved a ballot initiative to dramatically increase fines for short-term rentals operating without a permit. Beginning January 2, fines could go up to $20,000, plus $10,000 per day the unlicensed rental continues to operate. Currently, fines are capped at $1,000.

Out of more than 49,000 voters, 52 percent voted for the measure, which amends the county charter and will apply to the islands of Maui, Lanai, and Molokai.

In Maui County, short-term rental homes with permits can be rented without the owner present, unlike bed-and-breakfast rentals, where the owner is present on the property during guests’ stays. Short-term rentals are generally allowed in the Kapalua, Kaanapali, Wailea, and Makena resort areas. Around 10,000 permitted short-term rentals currently operate in Maui County.

Along with short-term rental permits, Maui short-term operators are also required to have licenses for Transient Accommodations Tax (TAT) and General Excise Tax (GET). Throughout the state of Hawaii, short-term rental income is subject to the TAT and GET. Hosts can pass these taxes on to their guests.

Unlike many states, Hawaii does not allow short-term rental platforms such as Airbnb and HomeAway to collect lodging taxes on behalf on their hosts. This means that hosts are responsible for collecting all lodging taxes on their short-term rentals themselves. Many Hawaii short-term rental operators use MyLodgeTax to manage lodging tax compliance.

More ballot measures

Maui voters were not the only ones weighing in on short-term rental issues on Election Day. Short-term rental proposals also appeared on ballots in South Lake Tahoe and Pacific Grove, California, and South Portland, Maine.

South Lake Tahoe

In South Lake Tahoe, Measure T would ban short-term rentals in residential areas, restricting them to the tourist core and commercial areas. Currently, approximately 1,400 of the city’s 1,800 licensed short-term rentals are outside the tourist core. The measure would go into effect on December 31, 2021, after a phase-out period.

According to unofficial results, the measure is leading by 113 votes without all provisional and mail-in votes being counted. El Dorado County has up 30 days to certify the election.

A restrictive new short-term rental law went into effect in South Lake Tahoe late last year. The regulations include a cap on the number of short-term rentals in the city (outside of the tourist core); noise, trash, and parking rules; $1,000 fines for both renters and owners for violations; and a “three strikes” provision in which rental owners who have three violations within a 24-month period can permanently lose their permit to offer short-term rentals. Short-term vacation rental operators must also be licensed and renew their registration every year.

Short-term rental hosts in South Lake Tahoe are required to collect city transient occupancy tax from their guests and pass those tax revenues on to the city.

Although Airbnb collects lodging taxes on behalf of its hosts in some California cities, it does not collect them in South Lake Tahoe, and neither do other listing platforms such as VRBO or HomeAway. That means that short-term rental operators are responsible for registering, collecting taxes from their guests, filing tax returns, and remitting taxes to the city.

Pacific Grove

In Pacific Grove, Measure M, which would ban short-term rentals in residential areas outside the coastal zone, appeared to have enough votes to pass. The law would phase out existing short-term rentals in prohibited areas within 18 months. It captured 58.9 percent of the vote based on early returns.

The measure would not change existing rules for home sharing, which allow short-term rentals if a host is present in the home. And current rules for short-term rentals in allowed areas would not change.

The city passed new short-term rental rules last year that allow a maximum of 250 short-term vacation rental licenses in the city at a time and limit the density of short-term rentals on any given block.

Short-term rental hosts are also required to collect the city’s Transient Occupancy Tax (TOT) from guests and remit it to the city. While Airbnb collects this tax from guests on behalf of its hosts, other short-term rental platforms, such as HomeAway and VRBO, do not collect the tax and short-term rental operators using those platforms are responsible for collecting it themselves.

South Portland

In South Portland, voters approved a measure to uphold regulations the City Council passed earlier this year. Those rules ban short-term rentals in residential zones when the owner is not present, although owners of single-family homes can rent their houses for up to 14 days per year when they’re away. Short-term rentals with the owner on site are allowed under certain conditions in residential areas.

Short-term rental operators must also be inspected, insured, and licensed by the city and pay Maine sales tax. Airbnb and HomeAway/VRBO collect this tax from guests for hosts.

South Portland’s law could influence its neighbor, Portland, the state’s largest city. The Portland City Council recently passed a moratorium on new permits for non-owner occupied short-term rentals and may look at tougher short-term rental rules.

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.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.