Honolulu suspends start of short-term rental registration program
- Apr 29, 2021 | Jennifer Sokolowsky
Honolulu’s new short-term rental registration program, originally scheduled to begin August 1, is now on hold.
The Honolulu Department of Planning and Permitting (DPP) suspended the start of the program after a public hearing about the administrative rules indicated potential problems with the ordinance. The planning department sought legal advice and determined that “some sections in the ordinance would create bigger problems for the city, as well as STR owners.”
Those potential sections include a lottery system to award vacation rental permits and a rule requiring short-term rentals to be located 1,000 feet away from each other.
The registration program is part of a law passed in 2019 that strictly regulates short-term rentals. Bill 89 prohibits whole-home rentals, called “transient vacation units,” outside of resort areas unless they have nonconforming use certificates (NUCs). New NUCs are no longer being issued.
However, the law allows around 1,700 units on the island to be rented for short terms, as long as they’re in homes where the owner lives (called "bed-and-breakfast homes"), and new permits can be issued for these.
Honolulu short-term rental owners are also required to obtain a vacation rental permit and include the permit number on any advertisement. In late 2020, Airbnb and Expedia Group (parent company of HomeAway and Vrbo) agreed to help Honolulu enforce short-term rental laws by requiring hosts to provide government-issued property identification and tax registration numbers.
The ordinance includes strong penalties for running illegal short-term rentals, with fines starting at $1,000 and escalating up to $10,000 per day. The law also allows the city to confiscate rental earnings.
The law was supposed to go into effect last November, but its start date was delayed due to the COVID-19 pandemic. All short-term rentals on Oahu were shut down due to the pandemic for much of 2020.
In addition to local rules, Hawaii vacation rental hosts must also comply with tax regulations. Short-term rental income in Hawaii is subject to transient accommodations tax (TAT) as well as general excise tax (GET). Vacation rental operators can pass these taxes on to guests, but hosts must register with the state, collect and pay the taxes, and file regular tax returns.
While short-term rental marketplaces collect taxes on behalf of their hosts in many states, they’re not allowed to do so in Hawaii. That means hosts are responsible for taking care of tax obligations. MyLodgeTax can help Hawaii short-term rental hosts by automating tax compliance.