Kihei Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Kihei

Kihei is a popular beach town located on the southwest shore of Maui, Hawaii. With its sunny weather, beautiful beaches, and laid-back vibe, Kihei attracts many visitors looking for vacation rentals through platforms like Airbnb and VRBO. However, before starting a short-term rental business in Kihei, it's important to understand the relevant regulations at the state and county levels.

At the state level, Hawaii requires all transient accommodations, which are rentals of less than 180 consecutive days, to obtain a registration number through the Department of Taxation. This involves paying a one-time $15 fee and registering to pay the Transient Accommodations Tax (TAT) of 10.25% on all rental income.

Maui County, where Kihei is located, has additional rules for short-term rentals. In most residential areas, short-term rentals are only allowed if the property has obtained a Short-Term Rental Home Permit from the Maui County Planning Department.

To be eligible for a permit, the property must have been constructed at least five years prior to the permit application date. The owner must also have owned the property for at least five years. Permit applications require submitting detailed site plans, building floor plans, parking plans, and a list of house rules and policies. There is a non-refundable permit application fee of $400.

Once issued, Short-Term Rental Home Permits must be renewed annually. The renewal fee is $200. All short-term rental advertisements must include the permit number. The property is subject to inspections upon 24 hours' notice to ensure compliance with all permit conditions.

It's important to note that Maui County limits the number of Short-Term Rental Home Permits in each community plan area. For example, the Kihei-Makena Community Plan caps the number of permitted short-term rentals at 100. As of April 2024, there is a waitlist for new permits in Kihei as the cap has been reached.

Some properties in Kihei may be exempt from needing a Short-Term Rental Home Permit if they are located within the Hotel District, which allows short-term rentals by right. Most of these properties are condotels or condo complexes that were specifically built and zoned for transient vacation rentals.

Another option for Kihei property owners is to apply for a Bed & Breakfast Permit instead of a Short-Term Rental Home Permit. B&B Permits allow rentals of bedrooms within an owner-occupied home. The owner must live on-site throughout the duration of any rental period. B&B Permits do not have a five-year ownership requirement, but they are limited to a maximum of two bedrooms and four guests at one time.

Failure to comply with Maui County's short-term rental regulations can result in significant fines and penalties. Unpermitted rentals are subject to an initial fine of up to $20,000 plus $10,000 per day for each day the unlawful operation persists. The county actively monitors vacation rental websites and investigates complaints to identify and shut down illegal rentals.

In summary, while Kihei offers an attractive market for short-term rentals, it's critical for owners to carefully research and follow all permitting requirements before listing their property. Working with an experienced local property manager can help navigate the complexities of Maui County's short-term rental regulations.

Short-Term Rental Licensing Requirement in Kihei

Property owners must obtain the necessary permits and approvals from the county government to launch and operate a short-term rental in Kihei, which is located in Maui County, Hawaii. Maui County has specific regulations for short-term rentals, which are defined as any rental period of less than 180 consecutive days.

The primary permit required for short-term rentals in Kihei is the Short-Term Rental Home (STRH) Permit. To be eligible for an STRH permit, the property must have been built at least five years prior to the application date, and the owner must have owned the property for at least five years.

The STRH permit application process involves submitting detailed documentation to the Maui County Planning Department, including:

• Completed application form
• Proof of ownership and property tax payments
• Site and floor plans showing parking, bedrooms, and other property details
• A list of House Policies and Rules for guests
• Neighbor Notification Letter
• Application fee of $400 (non-refundable)

Once issued, STRH permits must be renewed annually, with a renewal fee of $200. All short-term rental advertisements must prominently display the permit number.

It's important to note that Maui County limits the total number of STRH permits available in each community plan area. For Kihei, which falls under the Kihei-Makena Community Plan, the cap is set at 100 permits. As of April 2024, there is a waitlist for new STRH permits in Kihei, as the cap has been reached.

Some properties in Kihei may be exempt from needing an STRH permit if they are located within the Hotel District, which allows short-term rentals by right. These are typically condotels or condo complexes specifically approved for transient vacation rentals.

Another option for Kihei property owners is to apply for a Bed & Breakfast (B&B) Permit instead of an STRH permit. B&B permits allow for short-term rental of bedrooms within an owner-occupied home, with the owner required to be present throughout the rental period. B&B permits have a slightly different set of requirements and caps than STRH permits.

Failure to obtain the proper permit for a short-term rental in Kihei can result in significant fines and penalties from Maui County. Initial fines can be up to $20,000, with additional daily fines of $10,000 for continued unpermitted operation. The county actively monitors vacation rental websites and investigates complaints to identify and shut down illegal rentals.

In summary, obtaining a Short-Term Rental Home permit is critical for anyone looking to operate a vacation rental in Kihei. With the caps on available permits and the detailed application requirements, it's important for owners to carefully review and comply with all regulations to avoid costly penalties. Working with a knowledgeable local property manager can help navigate the permitting process.

Required Documents for Kihei Short-Term Rentals

Property owners must submit a comprehensive application package to the Planning Department to apply for a Short-Term Rental Home (STRH) permit in Kihei, Maui County. The application requires several key documents to demonstrate compliance with county regulations and ensure the property meets all necessary standards.

One of the most important documents is proof of ownership. Applicants must provide a copy of the property deed or other legal document showing they have owned the property for at least five years. This five-year ownership requirement is a key eligibility criteria for STRH permits in Maui County.

In addition to the deed, owners must submit a detailed site plan and floor plan of the property. The site plan should show the location of all buildings, parking areas, and landscaping. The floor plan must clearly label all bedrooms, bathrooms, and other living areas. These plans help the Planning Department verify that the property meets occupancy limits and parking requirements.

Another critical component of the STRH application is the Neighbor Notification Letter. Applicants are required to mail a standardized letter to all neighbors within 500 feet of the property, notifying them of the intent to operate a short-term rental. The letter must include specific information about the rental operation and allow neighbors to submit comments to the Planning Department.

Applicants must also provide a copy of their House Policies document, which outlines all rules and expectations for guests staying at the rental property. This includes quiet hours, parking instructions, trash disposal procedures, and any other guidelines to minimize impacts on the surrounding neighborhood.

To ensure compliance with fire safety standards, the application requires a floor plan identifying the location of all smoke detectors on the property. Maui County regulations mandate that smoke detectors be installed in each bedroom and in hallways leading to bedrooms.

Additional documentation may be necessary if the property is located in an agricultural district. This could include a Farm Plan outlining any agricultural activities on the property, or a State Special Use Permit allowing for the operation of a short-term rental in an agricultural zone.

Finally, all STRH permit applications must include payment of the non-refundable $400 application fee. This fee helps cover the administrative costs of processing the permit request.

In summary, the key documents required for a Kihei STRH permit application are:

1. Proof of ownership for at least five years
2. Site plan and floor plan of the property
3. Neighbor Notification Letter
4. House Policies document
5. Floor plan showing smoke detector locations
6. Farm Plan or State Special Use Permit (if applicable)
7. $400 non-refundable application fee

By carefully compiling all necessary documentation and submitting a complete application package, property owners can navigate the STRH permitting process and work towards legally operating a short-term rental in Kihei. However, with the current cap on permits in the area, new applicants may face a waitlist before being able to proceed.

Kihei Short-Term Rental Taxes

Like the rest of Maui County, short-term rentals in Kihei are subject to several state and local taxes. Property owners need to understand and comply with these tax obligations to avoid penalties and ensure a successful rental business.

At the state level, all short-term rentals in Hawaii are required to pay the General Excise Tax (GET) and the Transient Accommodations Tax (TAT). The GET is a broad-based tax that applies to nearly all business activities in the state, including rental income. The current GET rate is 4.166% on Maui.

The TAT is a tax specifically imposed on short-term rentals, defined as stays of less than 180 consecutive days. As of 2023, the TAT rate is 10.25% statewide. This tax is collected by the operator and remitted to the Hawaii Department of Taxation.

In addition to the state taxes, Maui County imposes its own tax on short-term rentals, known as the Maui County Transient Accommodations Tax (MCTAT). Effective November 1, 2021, the MCTAT rate is 3% on all gross rental proceeds. This tax is paid to the Maui County Department of Finance and is due on the same schedule as the state TAT.

So, in total, short-term rentals in Kihei are subject to a combined tax rate of 17.416%, broken down as:

1. 4.166% Hawaii General Excise Tax (GET)
2. 10.25% Hawaii Transient Accommodations Tax (TAT)
3. 3% Maui County Transient Accommodations Tax (MCTAT)

These taxes are generally passed on to the guest and collected as part of the rental payment. However, the property owner or operator is responsible for remitting the taxes to the proper authorities.

It's critical to keep accurate records of all rental income and tax payments. The Hawaii Department of Taxation and Maui County Department of Finance have the authority to audit vacation rental operators and impose fines for non-compliance.

In addition to the TAT and MCTAT, short-term rentals in Kihei are also subject to higher property tax rates than long-term or owner-occupied properties. For the 2022-2023 fiscal year, the short-term rental property tax rate in Maui County is $11.85 per $1,000 of assessed value, regardless of the property value. This is significantly higher than the $2.00-$2.71 rate for owner-occupied homes or the $3.00-$8.00 rate for long-term rentals.

The higher property tax rate for short-term rentals is part of Maui County's efforts to incentivize long-term housing and offset the impacts of vacation rentals on local infrastructure and services. By understanding and budgeting for these tax obligations, short-term rental owners in Kihei can ensure compliance and profitability in this popular Maui destination.

Hawaii Wide Short-Term Rental Rules

Hawaii has several statewide regulations that apply to short-term rentals across all islands. These rules provide a baseline framework, while each county may have additional, more specific requirements.

At the state level, all short-term rentals (less than 180 consecutive days) must obtain a transient accommodations tax (TAT) license from the Hawaii Department of Taxation. The TAT is currently 10.25% and must be collected on all rental income.

Hosts are also required to pay the state's general excise tax (GET) of 4.0% on all rental revenue. This tax applies to most businesses in Hawaii, including vacation rentals.

In 2021, the state legislature passed a bill requiring hosting platforms like Airbnb and Vrbo to collect and remit TAT on behalf of their hosts. However, the platforms are not required to collect the GET, so hosts must handle this tax obligation themselves.

Another statewide rule relates to advertising. Act 43, passed in 2021, prohibits the advertisement of any short-term rental that is not properly licensed or permitted under county regulations. Violators can face fines of up to $10,000 per day.

At the county level, each island has its own zoning and permitting requirements for short-term rentals. On Oahu, Bill 41 aimed to increase the minimum rental period to 90 days, but legal challenges have kept it at 30 days for now in certain areas.

Maui County has caps on the number of short-term rental permits and has stopped accepting new applications in many areas to manage tourism impacts. Kauai restricts most vacation rentals to designated visitor destination areas.

Hawaii County on the Big Island prohibits short-term rentals in single-family residential and agricultural zones, with some exceptions for hosted rentals and those with pre-existing use certificates.

Hawaii's statewide short-term rental regulations focus on taxation and consumer protection through advertising rules. The bulk of the restrictions on where and how rentals can operate is determined at the county level based on local needs and priorities.

Hosts must carefully research and comply with all state and county requirements to legally run a short-term rental anywhere in Hawaii. Failure to do so can result in significant fines and penalties. Many owners choose to work with local property managers to navigate the complex regulatory landscape.

As Hawaii continues to grapple with balancing tourism and housing, there have been increasing calls for a statewide approach to short-term rental regulation. But for now, the rules remain a patchwork of state and county laws that hosts must piece together to operate successfully in this popular market.

Does Kihei Strictly Enforce STR Rules?

Based on discussions from Airbnb hosts on Reddit and BiggerPockets forums, Kihei and Maui County as a whole are known for actively enforcing short-term rental regulations, especially compared to other parts of Hawaii. The general consensus is that Kihei is not particularly Airbnb-friendly due to the strict permitting requirements and potential for hefty fines.

Several hosts mention that Maui County has an online system where residents can easily report suspected illegal vacation rentals. The county is serious about cracking down on unpermitted STRs and investigating complaints. Fines for noncompliance can reach $20,000 for an initial offense plus $10,000 per day after that, which has made many hosts think twice about operating under the radar.

While some owners may still attempt to skirt the rules, most commenters advise against it given Maui's aggressive enforcement. The county has tools to identify illegal listings on platforms like Airbnb and VRBO. Some also mention the county using property tax records to find potential STRs that aren't complying with zoning.

Compared to other Hawaii destinations like Oahu's North Shore or parts of the Big Island, Maui and Kihei are much stricter. Hosts say it's not worth the risk of massive fines to operate an illegal rental when the county is so proactive about enforcement. Getting the proper permits is strongly advised before trying to launch an STR in Kihei.

That said, Kihei is still a very popular and profitable location for legal vacation rentals. Hosts who have gone through the proper permitting channels report strong occupancy and nightly rates. However, the days of simply buying a condo and throwing it up on Airbnb without the county noticing seem to be over.

The recent passage of statewide legislation allowing counties to phase out some STRs to increase housing supply has only emboldened Maui's stance. Hosts expect permitting to get even tougher in the coming years as the county looks to reign in vacation rentals.

Overall, the message from experienced hosts is clear: Kihei and Maui County are not places to try to operate an Airbnb under the radar. The risks of getting caught and penalized are too high. While still a great STR market for those who can secure legal permits, Kihei is definitively not "Airbnb friendly" for those looking to skirt local regulations. Enforcement is strict and only getting stricter as officials aim to balance tourism with housing concerns.

How to Start a Short-Term Rental Business in Kihei

Starting a short-term rental business in Kihei can be a lucrative venture, but it's important to follow the proper steps to ensure compliance with local regulations and set yourself up for success. Here's a numbered list of steps to get started:

1. Research and understand the short-term rental regulations in Kihei and Maui County, including zoning laws, permit requirements, occupancy limits, and tax obligations. Familiarize yourself with the differences between Short-Term Rental Home (STRH) permits and Bed & Breakfast (B&B) permits.
2. Determine if your property is eligible for a short-term rental permit. You may not need a special permit if it's in a hotel/resort zone and your HOA allows it. If it's in a residential or agricultural zone, check if permits are available and if you meet the ownership and property requirements.
3. If required, apply for the appropriate permit (STRH or B&B) from the Maui County Planning Department. This involves submitting a detailed application with supporting documents like proof of ownership, site and floor plans, parking plans, and neighbor notifications. Be prepared to pay the application fee and potentially attend a public hearing.
4. Register your business with the Hawaii Department of Taxation and obtain a General Excise Tax (GET) and Transient Accommodations Tax (TAT) licenses. These are required for all short-term rentals in Hawaii, regardless of permit status.
5. Set up your business entity (sole proprietorship, LLC, etc.) and open a business bank account to keep your rental income and expenses separate from your personal finances. Consult with a tax professional to understand your obligations and deductions.
6. Prepare your property for guests by thoroughly cleaning, furnishing, and equipping it with necessary amenities. Consider hiring a professional photographer to showcase your rental in the best light online.
7. Create a detailed property listing with accurate descriptions, high-quality photos, and information about amenities, house rules, and local attractions. Develop a system for managing inquiries, bookings, and guest communication.
8. List your property on popular vacation rental platforms like Airbnb, Vrbo, and Booking.com. Make sure to include your permit number (if applicable) and TAT license number in all listings.
9. Establish reliable cleaning and maintenance processes to ensure your property is always guest-ready. Consider hiring a professional vacation rental cleaning service and having go-to contractors for any repairs or maintenance issues.
10. Implement a dynamic pricing strategy that accounts for seasonality, demand, and local events. Regularly monitor your competition and adjust your rates to stay competitive while maximizing your revenue.
11. Provide excellent customer service to your guests before, during, and after their stay. Respond promptly to inquiries, offer local recommendations, and address any issues or concerns promptly and professionally.
12. Stay up to date on any changes to local short-term rental regulations and renew your permits and licenses as required. Regularly review and optimize your business practices to ensure long-term success.

By following these steps and being proactive in your compliance and management, you can build a successful and sustainable short-term rental business in Kihei. While the process may seem daunting at first, with proper planning and execution, you can tap into the strong demand for vacation rentals in this popular Maui destination.

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

If you have questions or need assistance with short-term rental regulations and zoning in Kihei, there are several key contacts and resources available:

1. Maui County Planning Department

Handles all short-term rental permit applications and zoning questions

Phone: (808) 270-8205
Email: planning@mauicounty.gov
Website: https://www.mauicounty.gov/121/Planning-Department

2. Maui County Department of Finance

Manages property tax assessments and collections, including short-term rental classifications

Phone: (808) 270-7697
Email: treasury.finance@mauicounty.gov
Website: https://www.mauicounty.gov/196/Finance

3. Hawaii Department of Taxation

Administers the state's General Excise Tax (GET) and Transient Accommodations Tax (TAT) for all short-term rentals

Phone: (808) 587-4242
Email: Taxpayer.Services@hawaii.gov
Website: https://tax.hawaii.gov/

4. Maui Vacation Rental Association (MVRA)

A local trade organization that provides education, advocacy, and resources for vacation rental owners and managers

Phone: (808) 283-2469
Email: info@mauivacationrentalassociation.org
Website: https://mauivacationrentalassociation.org/

5. Hawaii Tourism Authority (HTA)

The state's official tourism agency, which provides data, research, and resources on the vacation rental industry

Phone: (808) 973-2255
Email: info@gohta.net
Website: https://www.hawaiitourismauthority.org/

You can get the most relevant information and guidance for operating a short-term rental in Kihei by contacting the appropriate office or organization based on your specific needs and questions. Building relationships with these local authorities and staying informed about any changes or updates to regulations that may impact your business are important.

In addition to these official resources, connecting with other short-term rental owners and managers in the area can provide valuable insights and support. Joining local forums, and Facebook groups, or attending industry events can help you network with experienced hosts and stay on top of best practices and emerging trends in the Kihei vacation rental market.

What Do Airbnb Hosts in Kihei on Reddit and Bigger Pockets Think about Local Regulations?

Based on discussions from Airbnb hosts on Reddit and BiggerPockets forums, it seems that Kihei and Maui County have relatively strict regulations when it comes to short-term rentals compared to some other parts of Hawaii. Here are a few key takeaways:

Permitting Process: Hosts discuss the extensive permitting requirements in Maui County, which include obtaining a Short-Term Rental Home Permit from the Planning Department. This involves submitting detailed site plans, building sketches, parking arrangements, and neighbor notification letters. Some hosts feel the process is overly burdensome compared to other markets.

Minatoya List: Several hosts mention the importance of the "Minatoya List" in determining which condo properties are grandfathered in and allowed to operate short-term rentals. Properties built before 1989 in certain apartment zoning districts are exempt from needing a permit if they meet certain criteria. Hosts note that buying a condo on this list comes with a significant price premium.

Enforcement: Hosts comment that Maui County is known for actively enforcing short-term rental regulations, with stiff fines for non-compliance. The county has an online system for residents to report suspected illegal rentals, and some hosts have faced violations and penalties. This strict enforcement creates uncertainty for hosts.

Limited Permits: Hosts express frustration with the caps on short-term rental permits in certain areas of Maui, like the Kihei-Makena region. Once the cap is reached, no new permits are being issued, limiting hosts' ability to enter the market legally. Some question whether these caps are truly helping with housing affordability.

Dependence on Tourism: Despite the strict regulations, many hosts on BiggerPockets argue that Maui's economy is heavily dependent on tourism and vacation rentals. They believe the county is unlikely to overly restrict short-term rentals because it would harm the local economy and tax revenue. However, others worry that public sentiment could shift against vacation rentals.

Advice for New Hosts: When considering investing in a short-term rental in Kihei, experienced hosts recommend thoroughly researching the property's specific zoning and permitting requirements. They caution that just because a property is currently operating as a vacation rental, it may not be fully compliant with county regulations. Consulting with a local attorney and property manager is often advised.

Overall, the sentiment among Airbnb hosts on these forums is that while Kihei and Maui have a strong vacation rental market, the regulatory environment is relatively strict and can be challenging to navigate, especially for new hosts. Many stress the importance of due diligence and working closely with local experts to ensure compliance and avoid costly penalties.

Disclaimer: While we here at BNBCalc strive to keep all of our city 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 city 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.