If you own rental property in Hawai’i, you are required to pay certain taxes. These taxes vary depending on which island you own real estate on. This article is an overview of the taxes you have to pay if you own rental property on O’ahu. Please note, the taxes you pay will vary depending on whether the property is operated as a long-term or short-term rental. Also, if you are using a full service property management company, the company may collect and pay these taxes on your behalf.
A client’s 2 BR vacation rental at Waikiki Sunset. Click photo to reserve or here for video tour
Rather than having a sales tax, Hawaii has a GET that is assessed on all business activity. For a rental property on O’ahu, GET is currently 4.5% and needs to be paid on gross rental income and can be passed on to the tenant. It is important that you pay this tax according to your required filing frequency. Depending on your tax liability, taxes will be paid monthly, quarterly or semi-annually. You are required to file (Form G-45) and pay the taxes no later than the 20th day of the month following the close of the filing period. You are also required to file an annual return (Form G-49). This is due on the 20th day of the fourth month following the close of the prior taxable year. For most people, G-49 needs to be filed no later than April 20th of the following year.
To learn more about GET in Hawaii, please read: An Introduction to the GET
If a property is used as a “transient” accommodation (short-term rental), you will be required to pay the TAT. The State of Hawai’i defines “transient” accommodation as:
“A transient accommodation is a room, apartment, house, condominium, beach house, hotel room, suite, or similar living accommodation rented to a transient person for less than 180 consecutive days.”
The TAT is levied on gross rental or gross rental proceeds, which are any amounts received by an operator in cash, goods, or services for renting a transient accommodation without any deductions for costs. If you charge guests a cleaning fee, this fee is considered income and needs to be included into your TAT calculations. TAT needs to be paid in the same timeframe as your GET payments.
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A client’s 1 BR vacation rental at Ilikai. Click photo to reserve or here for video tour
There are situations in which you may not be required to pay TAT taxes in Hawaii. If your guests meet the following qualifications, you may be exempt from TAT:
To learn more about the TAT and forms you need to file to open an account as well as pay the tax, please click here: State of Hawai’i Intro to TAT
A client’s 1 BR vacation rental at Waikiki Banyan. Click photo to reserve or here for video tour
The O’ahu Transient Accommodation Tax (OTAT) is currently 3%. OTAT is imposed in addition to the TAT. Taxpayers who are registered with the State and have a valid State TAT number will be deemed registered for OTAT. Taxpayers subject to the OTAT do not need to register separately with the City.
Click here to view Form OTAT-1 that you use to pay the tax.
Looking for an investment property in Hawai’i? Simply call me directly at 808 354-5772 or click here. I’m here to serve you and look forward to helping you achieve your real estate goals.
Hawaii Life
You can email me at inquiry@hawaiilife.com or via phone at (808) 370-3848.
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You forgot to add if you have a tax exemption on your home it must be changed also. If you don’t show rental or doing business out of your house and continue to rent the state will get you for back taxes.
Thank you for sharing that and you are right, that would be helpful info for people to have. I’ll work on another article regarding property taxes for long term and short term rental properties. Take care
Nice post. I am glad to read this informative post. Thanks for sharing.
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