Owning a Short Term Vacation Rental Property – STVR Property in Hawaii

In order to operate an STVR you need to be in compliance with the planning department of Hawaii County, HOA and CC&rs:

https://www.planning.hawaiicounty.gov/resources/short-term-vacation-rentals

Please know that as of 2022, the county has been trying to amend how hosted and short-term vacation rentals operate. To follow along these changes, please visit https://www.hawaiicountytar.com/

This is based on assessed value and collected by our county government.

To learn more about Tax Rates – Click Here – https://www.hawaiipropertytax.com/tax_rates.html

Under the new proposed TAR, property taxes and exemptions will be affected. Please follow the changes here https://www.hawaiicountytar.com/

Check out Hawaii’s 10.25% transient accommodation tax (TAT).

How to complete your periodic transient accommodations tax return:
https://files.hawaii.gov/tax/forms/2019/ta1ins.pdf?fbclid=IwAR0o-7U4Fm-zr0_h34EgzxELZtawU2-Ynz2h2GPXMZoy_HeRheSzLQAmrs0

To learn more about TAT

https://files.hawaii.gov/tax/legal/brochures/TAT_brochure.pdf

GET and TAT filing requirements come with stiff penalties. There is no statute of limitations for audits. We strongly recommend always filing and pay your GET and TAT diligently.

You will also need to file a Hawaii State Income Tax Return. The return will be based on whether you are a part-time or full-time resident of The Big Island of Hawaii.

For more information, click here:

https://tax.hawaii.gov/forms/a1_2taxforms/

GET and TAT requirements are very important. They come with stiff penalties if you miss payments. You must file promptly and pay them on time to avoid any issues with the State of Hawaii

The State of Hawaii’s site is called Hawaii Tax Online and here you can process all online payments:  https://hitax.hawaii.gov

GET (form G-45) and TAT (form TA-1) are due by the 20th of the month following the end of filing period.
You will also need to file the Annual Return & Reconciliation for GET (form G-49), and TAT (form T-2) by April 20th of the following year.

It is imperative to conduct due diligence when handing over your property to a management company. In order for you to start on the right foot you need to ask all of the questions necessary in order for you to understand the management company obligations. There are local companies located on the Big Island that charge anywhere from 20%- 30% off the monthly revenue of the property rented. There are some options that offer 10%-15% management fees that offer less services but can get the job done.

Questions to ask the potential property manager:

1. How long have you been in the vacation rental management business in Hawaii?
2. Can you provide references from other property owners you currently manage in Hawaii?
3. What services do you offer as part of your vacation rental management package?
4. Do you have experience managing properties similar to mine in terms of size and location?
5. How do you handle guest inquiries, bookings, and reservations?
6. What is your pricing structure and what fees are associated with your services?
7. How do you market and promote vacation rentals under your management?
8. How do you handle maintenance and repairs for vacation rental properties?
9. What is your process for screening and selecting guests?
10. Can you provide detailed reports on rental income, expenses, and occupancy rates?
11. How many rental properties does your company handle?
12. Where are these properties located?
13. Can you provide a link of these properties for us to review the property comments?
14. What is your launch strategy for my listing? What are the busiest months based on past data?
15. What are the cleaning fees? How are cleaning fees adjusted?
16. What is your procedure for rate adjustments?

If they do real estate sales – ensure that they have a dedicated team that analyzes the daily rates of each property on a daily basis. There are companies that utilize an automated system and adjust rates 300 times every year. Adjustment of rates is an art and you can leave money on the table if the team you hire is not on it.

If your head is spinning already, let me refer you to a local CPA, and a management company that can perform! Feel free to send me an email at discoverthebigisland@gmail.com and I will make sure to provide you with as much information as possible.