Honolulu County, Hawaii Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Honolulu County, Hawaii?

Short-term vacation rentals on Oahu are highly regulated, with specific areas on the island designated for such rentals, along with strict conditions on occupancy limits and rental durations. Property owners must adhere to all regulations concerning short-term rentals and pay the relevant taxes to operate legally in Honolulu.

The regulations in Honolulu dictate that short-term rentals, also known as vacation rentals, provide guest accommodation for less than 30 consecutive days and are only permitted in resort-zoned areas and specific apartment-zoned areas to preserve housing for long-term residents. These regulations aim to strike a balance between catering to tourism demands and maintaining the integrity of residential and rural lands in Honolulu.

Starting a Short-Term Rental Business in Honolulu County

To start a short-term rental business in Honolulu County, property owners must navigate a complex regulatory landscape. The first step is to determine if your property is located in an area zoned for short-term rentals.

Honolulu defines two main types of short-term rentals:

• Bed and breakfast homes (B&Bs): The homeowner or permanent resident is present during the transient stay. Up to two rooms may be rented, with a maximum of two adult transient occupants per room.
• Transient vacation units (TVUs): Commonly known as whole home or unhosted rentals. A maximum of two adult transient occupants are allowed per room.

There also exist "grandfathered" short-term rentals outside resort zones that have been in operation since before October 22, 1986. These properties have been issued a nonconforming use certificate (NUC) that must be renewed annually to continue operating.

To register a new short-term rental, owners must:

1. Check if the property is eligible using the STR eligibility map
2. Register the property using the online STR registration form
3. Obtain a Transient Accommodations Tax (TAT) ID from the state
4. Add the registration number and TAT ID to any online listings

Advertising requirements mandate including the registration number and TAT ID on all listings. Failure to include this information can result in fines.

Hosts must also comply with building and housing standards related to health, safety, and habitability. This may require upgrades or renovations to meet code requirements.

Starting an STR business also involves understanding and complying with tax obligations, including the state Transient Accommodations Tax (10.25% on stays under 180 days) and the General Excise Tax.

Recent legal challenges, such as Honolulu's Bill 41 which aimed to extend the minimum rental period to 90 days, have created uncertainty in the market. However, a federal judge has allowed existing STRs to continue operating under previous 30-day minimum rules.

The strict regulations and active enforcement by Honolulu authorities make it crucial for hosts to ensure full compliance. Fines for illegal STRs can reach $10,000 per day. Working with local experts well-versed in the law is recommended to navigate the complex STR landscape in Honolulu County.

Short-Term Rental Licensing Requirements in Honolulu County

To legally operate a short-term rental in Honolulu County, property owners must register their rental and obtain a STR license from the Department of Planning and Permitting (DPP). The registration process involves several steps and required documents:

1. Registration Form: Complete the online STR registration form, providing information such as the Tax Map Key (TMK) number, number of bedrooms, maximum occupancy, and hosting platforms used.
2. Ownership Documents: Provide a title report as proof of property ownership.
3. Tax Licenses: Obtain and submit your General Excise Tax (GET) license and Transient Accommodations Tax (TAT) license from the State of Hawaii.
4. Homeowner Association Approval: If applicable, provide written confirmation of approval from your homeowner or apartment owner association to operate a STR.
5. Liability Insurance: Show proof of a minimum of $1,000,000 in commercial general liability insurance.
6. Informational Binder: Prepare a binder for guests with house policies, emergency contact info, and other required details.
7. Tax Exemption (B&Bs only): For bed and breakfast homes, provide evidence of a real property tax home exemption.
8. Statement of Compliance: Complete and sign a form affirming the property is not an affordable rental unit.

The non-refundable registration fee is $1,000, payable by check and mailed along with the application form to:

Department of Planning and Permitting
Attn: Short-Term Rental Program
650 South King Street, 15th Floor
Honolulu, HI 96813

Once all documents are submitted and the fee is paid, the DPP will review the application. If approved, a registration certificate valid for one year will be emailed to the owner/operator. The certificate number and property TMK must be included in all STR advertisements.

Annual renewal of the STR registration costs $500 and requires submitting updated documents, including:

1. Renewal application form
2. City and County of Honolulu real property tax clearance
3. City and County of Honolulu transient accommodations tax clearance
4. State of Hawaii general excise and transient accommodations tax clearance

Failure to register an STR or operating without a valid registration is subject to an initial fine of $5,000, and $10,000 for each day thereafter. Violations may also result in the property being barred from STR use for five years.

The registration and renewal process typically takes several weeks, so owners should plan accordingly and submit their applications well in advance of when they intend to begin renting. Working with a local property manager experienced in STR compliance can help navigate the licensing requirements and ensure a smooth registration.

Required Documents for Honolulu County Short-Term Rentals

To register a short-term rental in Honolulu County, owners must submit the following documents as part of their application:

1. Title Report: Provides proof of property ownership. This can be obtained from a title company or through the Hawaii Bureau of Conveyances.
2. General Excise Tax (GET) License: Required for all businesses in Hawaii, including STRs. Apply for a GET license through the Hawaii Department of Taxation.
3. Transient Accommodations Tax (TAT) License: Required for all STRs in Hawaii. Register for a TAT license through the Hawaii Department of Taxation and the City and County of Honolulu.
4. Homeowner or Apartment Owner Association Approval: If applicable, provide written confirmation from the association approving the operation of an STR on the property.
5. Commercial General Liability Insurance: Proof of a minimum of $1,000,000 in coverage. Contact an insurance provider to obtain this policy.
6. Informational Binder: Prepare a binder for guests containing house policies, emergency contact information, and other required details as outlined in the STR ordinance.
7. Real Property Tax Home Exemption (B&Bs only): For bed and breakfast homes, provide evidence of a real property tax home exemption to demonstrate the property is the owner's primary residence.
8. Statement of Compliance: Complete and sign this form affirming the property is not an affordable rental unit. The form is available on the Honolulu County STR website.

These documents must be submitted as part of the online STR registration process. The Department of Planning and Permitting (DPP) will review the application and, if approved, issue a registration certificate valid for one year.

Failure to provide all required documents or providing inaccurate information can significantly delay the approval of an STR registration. It is crucial for property owners to carefully review the STR ordinance and registration instructions to ensure compliance with all requirements.

Honolulu County Short-Term Rental Taxes

Short-term rental operators in Honolulu County are subject to several taxes at the state and local level. Understanding these tax obligations is crucial for hosts to remain compliant and avoid penalties. The main taxes applicable to STRs in Honolulu are:

General Excise Tax (GET): The state GET rate is 4% and the county surcharge is 0.5%, for a total of 4.5%. GET applies to all business activity, including rental income, cleaning fees, and other charges. GET is typically passed on to guests.

Transient Accommodations Tax (TAT): The state TAT rate is 10.25%, which applies to gross rental proceeds for stays under 180 consecutive days. This includes rent, mandatory resort fees, and cleaning fees. TAT is also typically passed on to guests and is exempt from GET when visibly passed on.

Property Tax: Honolulu is finalizing a new property tax structure for STRs with rates higher than owner-occupied residential properties. The proposed rate for STRs is $13.90 per $1,000 of assessed value, compared to $3.50 for owner-occupied homes. This change aims to generate more revenue from STRs to fund city services.

Hosts must register for GET and TAT licenses, file periodic returns, and remit taxes to the appropriate authorities. Failure to comply can result in fines, penalties, and interest.

Tax Deductions and Write-Offs

STR operators can claim various deductions to reduce their taxable income. Common expenses that may be deductible include:

1. Mortgage interest
2. Property taxes
3. Utilities
4. Insurance
5. Repairs and maintenance
6. Cleaning and supplies
7. Advertising and platform fees
8. Professional services (property management, accounting, legal)
9. Depreciation of furniture and equipment

Hosts should keep detailed records of all income and expenses and consult with a tax professional to ensure they are claiming all eligible deductions. Proper tax planning can help minimize the overall tax burden for STR businesses.

It's important to note that if a host claims a home exemption on their property taxes, they must update their status when converting to a short-term rental. Failure to do so can result in back taxes and penalties.

Navigating the complex tax landscape for STRs in Honolulu County requires careful attention to state and local requirements. By understanding their obligations, claiming eligible deductions, and staying up-to-date with changing regulations, hosts can optimize their tax strategy and maintain a profitable rental business.

Hawaii-Wide Short-Term Rental Rules

In addition to Honolulu County's specific regulations, short-term rental hosts must also comply with statewide laws and ordinances. The most significant recent development is the signing of Senate Bill 2919 by Governor Josh Green on May 3, 2024.

Senate Bill 2919 grants counties the authority to regulate the time, place, manner, and duration of short-term rentals through zoning regulations. Key points of the law include:

1. Counties can phase out short-term rentals in residential and agricultural zones.
2. Counties have the power to allow transient accommodations for up to 180 consecutive days.
3. The law is designed to be interpreted in favor of the counties exercising these powers.
4. Violators of county regulations enabled by this law will face fines of $10,000 per day.

The law aims to address Hawaii's housing crisis by allowing counties to convert short-term rentals into long-term residential housing. It will not affect properties participating in state and federal leasing programs for families in need.

In addition to SB 2919, hosts must comply with state tax requirements:

Transient Accommodations Tax (TAT): STR operators must pay the 10.25% state TAT based on gross rental proceeds for stays under 180 days. This tax is typically passed on to guests.

General Excise Tax (GET): The state GET rate of 4.5% (4% state + 0.5% county surcharge) applies to all rental income, cleaning fees, and other charges. GET is also typically passed on to guests.

Hosts are responsible for registering with the Department of Taxation, filing periodic tax returns, and remitting taxes. Failure to comply can result in fines, penalties, and interest.

Other statewide regulations include:

1. Hosts must include their TAT ID number in all advertisements.
2. Vacation rental properties must meet all health, safety, and building codes.
3. Hosts must provide local contact information to guests and neighbors.

With the passage of SB 2919, Honolulu County hosts should closely monitor any new county-level regulations that may further restrict or prohibit short-term rentals. The law provides a framework for significant changes in how STRs are regulated across Hawaii, with the potential for phasing out these rentals in certain areas to boost long-term housing supply. Hosts must stay informed and adapt to the evolving legal landscape to ensure compliance with all state and county requirements.

Does Honolulu County Strictly Enforce STR Rules?

Honolulu has been cracking down on illegal short-term rentals, with the city issuing thousands of dollars in fines to violators. The strict regulations and active enforcement by Honolulu authorities make it crucial for hosts to ensure full compliance. Fines for illegal STRs can reach $10,000 per day.

However, a federal judge recently ruled that existing short-term rentals outside resort zones that have been operating for years can continue their operations under previous 30-day minimum rental rules. This ruling allows these "grandfathered" STRs to continue, but it doesn't apply to any new short-term rentals.

Compared to other cities, Honolulu is not particularly Airbnb-friendly due to its stringent regulations and enforcement. Cities like San Diego and Austin are known for being more accommodating to short-term rentals.

Despite the strict rules, some hosts continue to operate their short-term rentals in Honolulu, often under the radar of city officials. Some have reported being able to operate without a license by listing their properties on platforms that do not require one, such as Facebook Marketplace or Craigslist.

However, with the city encouraging residents to report suspected illegal rentals and dedicating resources to enforcement, operating an unlicensed STR in Honolulu is becoming increasingly risky. The consensus among hosts on platforms like BiggerPockets and Reddit is that the potential consequences, including hefty fines and legal troubles, outweigh any potential benefits of operating illegally.

In conclusion, while some hosts may still attempt to skirt the rules, Honolulu County's strict enforcement and substantial penalties make operating an illegal short-term rental a risky proposition. For those looking to enter the STR market in Honolulu, carefully navigating the licensing process and ensuring full compliance with all regulations is the only prudent path forward.

How to Start a Short-Term Rental Business in Honolulu County

Starting a short-term rental business in Honolulu County requires careful planning and adherence to local regulations. Follow these steps to successfully launch your STR:

1. Determine property eligibility: Check if your property is located in an area zoned for STRs using the online eligibility map. Only properties in resort zones and select apartment zones are permitted.
2. Choose your rental type: Decide if you will operate a bed and breakfast (B&B) with the owner present or a whole-home transient vacation unit (TVU). B&Bs are limited to renting two rooms, while TVUs have occupancy limits based on the number of rooms.
3. Register your STR: Complete the online registration form, providing property details, tax information, and required documents. Pay the $1,000 non-refundable registration fee. Gather all necessary documents before starting the registration process to avoid delays.
4. Obtain required licenses: Apply for a General Excise Tax (GET) license and a Transient Accommodations Tax (TAT) license from the State of Hawaii. These are required for all STR operators.
5. Prepare your property: Ensure your rental meets all health, safety, and building code requirements. Create a guest information binder with house rules, emergency contacts, and other required details. Invest in quality furnishings, linens, and amenities to make your rental stand out and attract positive reviews.
6. Set up your listing: Create a compelling listing on popular vacation rental platforms like Airbnb and VRBO. Include high-quality photos, detailed descriptions, and your STR registration number.
7. Establish pricing and policies: Research comparable rentals to determine competitive nightly rates. Set clear policies for bookings, cancellations, and house rules. Use dynamic pricing tools to automatically adjust rates based on demand and seasonality.
8. Manage your bookings: Respond promptly to inquiries and booking requests. Use a calendar system to avoid double bookings and ensure smooth turnover between guests.
9. Arrange cleaning and maintenance: Hire a reliable cleaning service to prepare the rental between guests. Establish a maintenance schedule to keep the property in top condition.
10. Comply with ongoing requirements: Renew your STR registration annually, file periodic tax returns, and maintain accurate records of all income and expenses. Consider hiring a local property manager experienced in STR compliance to handle day-to-day operations and ensure adherence to regulations.

By following these steps and staying informed about local regulations, you can successfully launch and operate a short-term rental business in Honolulu County. Remember to prioritize guest satisfaction, maintain open communication with neighbors, and always strive to be a responsible STR operator.

Who to Contact in Honolulu County about Short-Term Rental Regulations and Zoning?

For questions about short-term rental regulations and zoning in Honolulu County, the primary contact is the Department of Planning and Permitting (DPP). Here are the key contacts and resources:

Short-Term Rental Program

• Phone: (808) 768-8127
• Email: info@honolulu.gov

For technical assistance with the STR registration portal:

• Phone: (877) 352-3277, extension 5 (available 6:00 a.m. to 2:00 p.m. HST)
• Email: STRsupport@avenuinsights.com

Zoning Code Reviews

Phone: (808) 768-8245

Housing Code Inspections, Complaints, and Investigations

Phone: (808) 768-8116

DPP Main Office
650 South King Street
Honolulu, HI 96813

In addition to contacting the DPP directly, hosts can find valuable information and support from local organizations and online communities:

Oahu Short-Term Rental Alliance (OSTRA)

OSTRA is a non-profit organization that advocates for fair and reasonable short-term rental regulations on Oahu. Their website (ostra.org) provides updates on regulations, FAQs, and resources for hosts.

BiggerPockets Honolulu Short-Term Rental Forum

The BiggerPockets forum has a dedicated section for discussing short-term rentals in Honolulu (www.biggerpockets.com/forums/530/topics/1066055-short-term-in-hawaii). Hosts share their experiences, ask questions, and provide advice on navigating local regulations.

Honolulu Airbnb Hosts Facebook Group

This private Facebook group is a community for Airbnb hosts in Honolulu to connect, share tips, and stay informed about regulations and best practices.

By contacting the DPP and engaging with local host communities, short-term rental operators in Honolulu can stay up-to-date on the latest regulations and get the support they need to run compliant and successful businesses.

What Do Airbnb Hosts in Honolulu County on Reddit and BiggerPockets Think about Local Regulations?

Airbnb hosts in Honolulu County have shared their experiences and thoughts on local short-term rental regulations across various online platforms. Here are some insights from Reddit and BiggerPockets:

Reddit - r/airbnb_hosts

In a thread titled "Does anyone own an Airbnb in Hawai'i? (Oahu)," hosts discuss the current state of STR regulations on the island. Key points include:

• STRs are now largely outlawed, with only those holding existing licenses allowed to operate.
• Condos in special zones, such as Waikiki, can still be listed on Airbnb or other STR platforms.
• Some HOAs are charging significant fees to owners doing STRs, leading some hosts to delist their properties.
• The minimum rental period is 30 days, with discussions about potentially increasing it further.

BiggerPockets Forum

Several threads on the BiggerPockets forum highlight the challenges and uncertainties surrounding STR regulations in Honolulu:

In "Rules about Airbnb in Hawaii," a host inquires about exceptions to the 30-day minimum rental rule, noting the prevalence of STR listings despite the regulations. Responses suggest that only properties in resort-zoned areas, such as Waikiki, Ko'olina, and Kuilima, can legally operate as short-term rentals.

The thread "Condo In Hawaii for Air Bnb" features a potential investor considering purchasing a condo in Hawaii for STR use. Replies emphasize the importance of ensuring the property is located in a resort-zoned area to operate legally.

In "Thoughts on the increased minimum stay for Short-term rentals?", hosts discuss the impact of a new bill requiring a 90-day minimum stay for STRs in residential areas. Concerns include the viability of operating STRs under such restrictions and the potential loss of income for hosts.

These discussions highlight the complex and evolving nature of STR regulations in Honolulu County. Hosts express frustration with the strict rules and the challenges they pose to operating a successful STR business. Many emphasize the importance of thoroughly researching zoning requirements and staying informed about legislative changes to ensure compliance and avoid penalties.

Despite the regulatory hurdles, some hosts continue to operate STRs in Honolulu, particularly in resort-zoned areas. However, the general sentiment among hosts on these platforms is that the current regulatory environment makes it increasingly difficult to run a profitable and compliant STR business in Honolulu County.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.