Airbnb on Hawaii: What Is and Isn’t Legal?
Being an Airbnb host offers an opportunity to greet guests from around the world, share the aloha spirit, and earn some extra income. But there are several regulations that govern the Airbnb experience on our islands – many which currently make it difficult to legally host an Airbnb. While this information is not exhaustive nor legal advice, and it is only current at the time of writing (City and County of Honolulu Mayor Kirk Caldwell recently proposed a package of bills to change Airbnb regulations.), the following are some legal aspects to consider when thinking about becoming an Airbnb host.
Zoning laws dictate whether the property can be legally used as a short-term rental and differ on each island.
Oahu: According to zoning laws, legally operating short-term rentals (less than 30 days) on Oahu are those operating in “resort” zones, primarily found in Waikiki, or 816 properties grandfathered in under the law, which are mostly in high-rise apartments located near Waikiki.
If someone wanted to legally have a “bed and breakfast home” (owners live on-site and rent spare rooms or cottages) or a “vacation unit” (renting of entire homes/apartments while owners are not present), they would need to obtain and periodically renew a “nonconforming use certification” from the City and County of Honolulu. Unfortunately, no nonconforming use certifications have been issued since the late 1980s.
Maui: Areas zoned for hotel use can legally operate Airbnbs; around 9,000 vacation rentals are operating in hotel zones on Maui. If Airbnbs outside the hotel zone meet pre-existing criteria, they may be legally allowed to operate; as of November 2018, 353 vacation rentals had permission to operate outside of the hotel zone. It is illegal to do a short-term Airbnb rental of a single-family home on Maui.
Kauai: Airbnbs are legal in certain tourist destination areas in Poipu, Wailua, Lihue, Kapa‘a, Princeville, and Waimea. There are around 3,000 to 4,000 vacation rentals in these areas, and Kauai no longer legally allows short-term rentals outside of these designated areas.
The Big Island: Bed and breakfasts can legally operate in resort-hotel, commercial, and most residential zones (double-family residential, residential-commercial mixed-use, multifamily residential). In urban, rural, and agricultural zones, permits are issued by the county to operate bed and breakfasts; around 145 such permits had been issued at the time of writing. Hawaii County does not currently regulate vacation units or “transient vacation rentals” (renting of entire homes/apartments without owners present).
Airbnb listings – whether legal or illegal – must abide by Hawaii tax laws.
Certificate of Registration: Airbnb hosts must obtain a Certificate of Registration from the Hawaii Department of Taxation, as required by Hawaii state law. After successfully obtaining the Certificate of Registration, Airbnb hosts are required to post the Tax ID on their online listing.
Transient Accommodations Tax: After registering and obtaining a Tax ID, Airbnb hosts are ready to pay their taxes to the state! The Transient Accommodations Tax is applied to stays of less than 180 days. As of January 1, 2018, the Transient Accommodations Tax is 10.25 percent.
General Excise Tax: Hawaii does not have a sales tax; instead, we have the General Excise Tax (GET), which is assessed on all business activities, including short-term rentals. The current GET is 4.712 percent on Oahu.
Construction laws and neighborhood rules add additional regulations to Airbnb listings.
Building and Housing Standards: Oahu’s Building Code and Housing Code specify the minimum requirements for construction, maintenance, health, and safety. Regulations differ between residential and non-residential uses and between islands, so consult the codes for more information.
Other Rules: There may be other contracts or rules that regulate your potential Airbnb listing, such as leases, HOA rules, or co-op or condo board rules. Read lease agreements or check with the appropriate parties if applicable.
Enforcement of the laws and regulations is not an easy endeavor.
The Hawaii Appleseed Center for Law and Economic Justice estimates 23,000 vacation rentals exist in Hawaii, many which are illegal.
Inspectors on each island try to enforce the zoning laws. But with thousands of Airbnb listings and less than twenty zoning inspectors in each county, enforcement is problematic. Online advertisements do not provide enough evidence to prove an Airbnb listing is illegal. Inspectors must obtain information like the visitor name, the duration of their stay, and documentation of compensation. Once the inspector does have enough evidence and issues a violation notice, the Airbnb host has 30 days to make corrections, or they will be fined.
Also, it is difficult for the state to determine whether Airbnb hosts pay the state taxes. Because of privacy laws, the State Department of Taxation is currently trying to obtain a subpoena to collect host information from Airbnb.
While there are several controversial and potentially changing regulations that govern Airbnb listings, the benefits of becoming an Airbnb host may outweigh the bureaucratic burdens. Consult a lawyer, an accountant, the Department of Planning and Permitting, the Department of Taxation, or other county or state agencies for more information.