Buying A Vacation Rental On Kauai? What You Need To Know #1 Location What's a VDA on Kauai?
Senate Bill 2919 and the Fate of Short-Term Rentals on Kauai
Short-term rentals, a la Airbnb or VRBO, started popping up in Hawaii decades ago, and have in recent years exploded in popularity. The last year has seen an unprecedented 30% increase in the number of properties being used as vacation rentals. Many visitors to the islands prefer the more local feeling of staying in a home as opposed to a hotel, and short-term rentals are more lucrative than long-term leased rentals for the property owners. Local residents have been trying for years to mitigate the effects of short-term rentals on the housing market. In 2022 Oahu attempted to ban short-term rentals between 30 and 89 days in length outside of resort areas, however a federal judge ruled in favor of the short-term rental owners, and the ban did not go into effect. The City and County of Honolulu define short-term rentals, also referred to as vacation rentals, as lodgings that provide guest accommodation for fewer than 30 consecutive days.
Amazing Things to Do in Kihei: your South Maui bucket list
To apply for a short-term rental home permit, the single family dwelling must have been constructed at least 15 years before the date of application, and the applicant must have owned the dwelling for at least 15 years. Moreover, an applicant can hold only one STRH permit, and permits are not transferable. Generally speaking, Hawaii has left it up to county authorities to regulate Airbnb rentals in line with the housing needs of local communities. Hawaii Airbnb property owners need to familiarize themselves with all applicable taxes in order to collect them and remit them on time to avoid legal problems. Similarly, they should be aware of available deductibles to optimize their cash flow and profit. Most Realtors know that being able to vacation rental a property is a big selling point.
There have been hundreds of Kauai residents who have submitted their case to the county to justify the need for a larger amount of permits accepted each year.The state of Hawaii does not really have a bill that regulates short-term rentals at the state level.There are lots of places with spot zoning for condos which makes understanding where our Visitor Destination Areas are a bit confusing.
The History of TVR Regulations on Kauai
As a result of the ordinance, all vacation rental properties in Kauai had to register with the County of Kauai in order to legally operate as a vacation rental. While Honolulu vacation rental regulations limit the geographic scope, savvy investors might be able to locate profitable opportunities within the allowed zones as long as they know how to find Airbnb properties for sale with strong potential. After all, as the capital of Hawaii and the main gateway to the island chain, Honolulu remains an attractive destination for different types of travelers, including vacationers, remote workers, and business travelers.
In fact most properties especially residential homes cannot be vacation rented on Kauai. A vacation rental or short-term rental on Kauai is considered a rental that is less than 6 months. If wanting a short term vacation rental make sure its in the Visitor Destination Area (VDA) or is a legal Transient Vacation Rental (TVR).
While Hawaii defines vacation rentals at the state level, they are generally regulated at the county level. The truth of the matter is that Hawaii has some of the most restrictive short-term rental laws nationwide, but savvy investors may still be able to find profitable opportunities in local markets that allow non-owner occupied short-term rentals. The answer to that, it is our opinion that there will be little impact on Kauai.
Your Airbnb revenue forecast: Brighter days ahead
As one of the most popular Hawaii islands, this can be a great location for investing in a vacation rental with a strong average daily rate (ADR) and occupancy. To find the right property in a permitted location, you could work with one of the best real estate agents or a local property manager who is familiar with regulations as well as top locations. VDAs are specific zones on Kauai where resort activities and short-term vacation rentals are legally permitted.
TAT or Transient Accommodation Tax, is imposed on gross income derived from the likes of renting your home for vacation purposes. TAT is charged for all hotels and vacation properties at a rate of 9.25%, although that will increase to 10.25% starting January 2018. GET, or General Excise Tax is a tax imposed on business activity by the State of Hawaii. In other words, if you are running an Airbnb or VRBO out of your home as a business, then you need https://riverestate.com/ https://riverestate.com/ to be filing the necessary forms to pay your General Excise Tax. The tax is computed from the total gross income of your home-based business and not off of the profits. Both homestays and SFTVRs that were operational prior to July 31, 2009 can continue working outside VDAs as long as they have a nonconforming use (NCU) certificate.