Honolulu Property Tax for Vacation Rental. Residential to Resort?

3 Replies

Does anyone have any experience reclassifying a legal vacation rental from residential to resort for property tax purposes?

The unit I purchases for a vacation rental is classified as a residential property with a 0.45% tax rate versus a resort with a 1.39% tax rate.  

According to this website, reclassifying a property from residential to resort results in paying the current and past years resort tax rate! 

- Since the Fiscal Year ends on June 30, is it better to reclassify on July 1 so I'm not paying for an extra year of taxes (2019, 2020) versus waiting (2020, 2021).

- Anyone run a vacation rental, pay the GET/TAT taxes under a residential property tax classification?  What's the likelihood of getting 'caught'.

Thanks so much!

Ive run a AirBnB as residential property, and the state had no problem taking my GET/TAT taxes lol. Your GET/TAT tax ids aren't really tied to a property - more to you as an individual. 

As far as risk, about a year and half ago, Oahu passed Bill 89, which was made to crack down on all the illegal rentals in residential areas. I know guys who still run, and I also know guys that have been cited. Its really your tolerance for risk. I know after the Bill 89, I wasn't comfortable running one anymore. Other islands have different rules, just fyi too. 

Thank you @Daniel Kong . That's the weird thing. When applying for the GET/TAT account, you have to list your property address. I don't know why they don't just check the property tax and GET/TAT databases.  In any case, my realtor suggested that I just operate under residential as there aren't additional fines if I'm caught; just that I have to back pay taxes, which I would have had to do anyway.

@Petra M. Hmm are you sure you are listing your property address or is it just your home address? Maybe I set mine up wrong. My CPA told me to just use one GET/TAT account/ID for all my properties. I dont think I entered multiple addresses. But its true that there are no real repurcussions for not reporting your TAT income other than interest on money owed.