Updated: Apr 22, 2018
If you bought a property in Hawaii and would like to rent it out there are few things you need to know.
1. Is the building allowing short term rental at all?
Most condos in Hawaii are not to be used for Airbnb or daily rental. If you use your condo unit as daily rental you may get cited and pay fine.
2. You will need to get GET (General Exercise Tax) ID for any rental activity on the island. Some may need TAT (transient accommodation tax) ID if you plan to do short term rental such as Airbnb.
And yes you will need to report your rental income on your end of the year state and federal tax.
Here’s how to do it:
What Are These Licenses For?
General Excise Tax is similar in some respects to a sales tax. When you buy something at a store, GET is usually added on to the purchase price. GET also applies to independent contractors, such as landlords, realtors, handymen etc. The State of Hawaii collects GET at several different levels.
The GET rate is 4.5%. However, the taxpayer must pay the State of Hawaii "tax on tax". For example a $100 sale would normally generate $4.50 in tax. Vendors generally pass the tax on to the consumer and one might conclude the amount with passed on tax would be $104.50. Actually, the state charges 4.5% on the amount collected, which is $104.50 so the tax due is $4.70 ($104.50 x 4.5%).TAT is charged at 9.25%. The state does not charge "tax on tax" for this room tax.Short term rentals such as hotel rooms are subject to BOTH GET and TAT. Thus, a $100 room rate would cost a customer about $118 with the taxes added..
How to Apply for the Licenses
The Traditional WayComplete the BB-1 form and mail it in with the application fee (approximately $20). If you're getting the licenses for a transient rental, make sure an apply for both the GET and TAT licenses. For long term rentals, a GET license maybe all you need.The High Tech WayApply for the licenses online! Visit the Hawaii Business Express website. Then click "Create an Account". If you're a first time user, click "No" and proceed to setting up your account.