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Big Island Ban on Timeshare Rentals: Ordinance 18-114

zerocylinders

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We own at Bay Club Villas and typically rent out our week every couple of years through VRBO (we use it the other years). VRBO has informed us that they will take down our listing unless we register. I have looked at the registration requirements under Ordinance 18-114 and it seems almost impossible for an owner (even an owner of a deeded week as in our case) to register... Aside from the ridiculous $500 fee, (1) information for ALL owners at the same location must be provided (including home address which I could never get for every owner), and (2) the landowner must separately provide an authorization.

This would appear to effectively ban rentals of timeshare units in Hawaii county.

Has anyone been successfully registered in Hawaii county under this ordinance? If so, how to get around the landowner and other owner information requirements of the form?

If not, is anyone aware of any law firm who has taken in interest in challenging this ordinance? Given that Hawaii allowed (indeed encouraged) the sale of timeshares as deeded property, this ordinance would seem to be subject to a successful challenge from timeshare owners in the area who are now deprived of an important aspect of ownership.
 

jimwu921

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Got the same call. Told them it's the timeshare which is exempt and they bounced :wave:
 

jimwu921

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It means the timeshare rental ads can still be on vrbo without the need to pay $500 registration.
 

PamMo

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Thank you. Good to know.
 

zerocylinders

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It means the timeshare rental ads can still be on vrbo without the need to pay $500 registration.
That is really good news! Are you sure it is exempt? I read through the ordinance and I did not see any exception for timeshares but I could easily have missed something.
 

jimwu921

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That is really good news! Are you sure it is exempt? I read through the ordinance and I did not see any exception for timeshares but I could easily have missed something.
Thats what the VRBO told me after I stated my case.....
 

easyrider

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Got the same call. Told them it's the timeshare which is exempt and they bounced :wave:
I wonder how a timeshare owner renting out a timeshare in Hawaii would not have to pay the GET and TAT which is based off the gross rent. It seems that the mf should be deductible as it is a managers fee of sorts but from what the brochure says it isn't. What the brochure says is to pay the GET and TAT off the gross receipt. Just in case an owner gets stuck paying these taxes it might be a good idea to collect them even if you don't pay them.

Bill

http://files.hawaii.gov/tax/legal/brochures/res_rp_brochure.pdf
 

JIMinNC

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I wonder how a timeshare owner renting out a timeshare in Hawaii would not have to pay the GET and TAT which is based off the gross rent. It seems that the mf should be deductible as it is a managers fee of sorts but from what the brochure says it isn't. What the brochure says is to pay the GET and TAT off the gross receipt. Just in case an owner gets stuck paying these taxes it might be a good idea to collect them even if you don't pay them.

Bill

http://files.hawaii.gov/tax/legal/brochures/res_rp_brochure.pdf
I only have experience with Hilton and Marriott, so not sure how independent timeshares handle this, but the TAT/GET is generally collected and remitted by the resort, which is a registered entity. We pay TAT whenever we stay on our owned week, a points booking, or an exchange. Like hotels, timeshares generally have a method of collecting/remitting the tax. The problem is with whole-ownership condos rented by their owners who have not registered to pay the tax. That is what the ordinance seems to address.
 

CalGalTraveler

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It's interesting how many geos are placing restrictions or banning AirBnB/VRBO. In NYC there is a law (being challenged in court) that bans homeshares but timeshares are exempted because they are considered hotel properties. Probably for the same tax reasons and they don't displace permanent rentals.
 

JIMinNC

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It's interesting how many geos are placing restrictions or banning AirBnB/VRBO. In NYC there is a law (being challenged in court) that bans homeshares but timeshares are exempted because they are considered hotel properties. Probably for the same tax reasons and they don't displace permanent rentals.
In some jurisdictions the opposition is coming for tax collection reasons, and/or political push from hotel operators or hotel labor unions who feel VRBO/AirBnB are operating at an advantage over traditional lodging options. In that sense, the opposition is really no different than the resistance to change seen with taxi drivers and taxi companies trying to put restrictions on Uber/Lyft, or brick-and-mortar retailers who feel Amazon is operating at an unfair advantage. New business models and innovation often face resistance from those whose business models are being altered or replaced.

However, in the case of VRBO and AirBnB, the problem goes much deeper and starts impacting quality of life in neighborhoods. If you think you are buying a home or condo in a single-family, whole ownership neighborhood and then suddenly find investors buying up nearby houses and condos to rent on AirBnB or VRBO, thus making your neighborhood more transient, that is something that goes straight to quality of life and even safety/security. Also, these trends can tend to drive up housing prices and serve to price people out of buying into the neighborhoods they want to live in. So while I am generally not in favor of governments trying to protect business models that are being displaced/replaced by innovation and entrepreneurship, in the case of short-term rental of houses/condos in what are intended to be single-family, non-rental neighborhoods, I do think local governments have a proper duty to enact restrictions to try to preserve the quality of life of these residents.
 

Henry M.

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I think it is one thing for an owner to rent out part of a home or even a whole apartment, and quite another to buy up half of a condo building and essentially run a hotel. There is also the problem outlined by JimNC.

I have enjoyed using VRBO and AirBnB, but I also know of localities where residents are being displaced because short term rentals are making it unaffordable for people to rent or buy a place for long term use. San Francisco and other large cities are examples. This and gentrification are big issues that are difficult to solve.
 

PamMo

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..San. Francisco and other large cities are examples...
Much smaller towns are divided over nightly rentals, too. We're househunting in Sedona, and the number of AirBnB homes in some neighborhoods (the Chapel area being just one) is stunning. Residents complain of noise, garbage, and parking problems, but the rentals still multiply. Many homes are listed with their current or potential AirBnB income. Several that we've looked at were bought by investors who turned them into nightly rentals. Housing is very tight for the average family working in Sedona.
 

Ralph Sir Edward

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(from the link:)

"If this describes your vacation rental, please proceed to the next section, “What do I apply for?” to determine which STVR approvals you will need to apply for. If this does not describe your rental, please contact us at the Planning Department to discuss how the new law may affect your rental."

I recommend the OP contact the Planning Department and ask how existing timeshares are considered under 18-114.

I have taken the "bull by the horns" and sent an email asking about the situation. I will inform everybody when (if!) I get an answer.
 
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geist1223

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Much smaller towns are divided over nightly rentals, too. We're househunting in Sedona, and the number of AirBnB homes in some neighborhoods (the Chapel area being just one) is stunning. Residents complain of noise, garbage, and parking problems, but the rentals still multiply. Many homes are listed with their current or potential AirBnB income. Several that we've looked at were bought by investors who turned them into nightly rentals. Housing is very tight for the average family working in Sedona.
This is way many jurisdictions are looking at banning whole home rentals. Only allowing short term rentals of a room or two and then only if owner lives in home full time.
 

Ralph Sir Edward

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And here is the answer (from the horse's mouth):

"
Good afternoon,

Timeshares are not covered under the Short-Term Vacation Rental (STVR) ordinance, unless they are exclusively being used as STVR's.

If you require further information, please feel free to contact me.

Have a great day!

Hans Santiago
County of Hawaii, Planning Department
101 Pauahi Street; Suite 3
Hilo, Hawaii 96720
Ph. (808) 961-8165
Fax. (808) 961-8742
E-mail: Hans.Santiago@hawaiicounty.gov
"
Since most of our timeshares are covered by a "non-commercial" use in our governing docs, they most likely would not be covered by the term "exclusively being used".
 

TXTortoise

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A bit late to this thread, as I was searching for threads on the Hawaii rental tax requirements.

TAT - Transient Accommodations Tax
GET - General Excise Tax

To be legally compliant, if you rent your unit in Hawaii, you are responsible for filing the TAT and GET taxes, which are computed on your gross rental amount. It has nothing to do with income tax, MF deductions, etc.

TAT is 10.25% and GET varies slightly by island, with Maui being the lowest at 4%. So roughly 15% of gross rent, unless you list and collect the tax separately in your invoice. There's also a small registration charge to signup in the Hawaii tax system for your TAT and GET license.

You would also file the income in your IRS return along with a Hawaii state return. Hawaii requests a copy of your federal return, with the state return.

The renter, or owner, when staying in the unit will pay an additional Occupancy Tax, this is collected by the resort and paid directly to the state. This is the one we all see hitting our credit card each morning of our stay, e.g., $15-$22/night.

Pretty good summary here:

All that said, very few owners renting out their timeshares likely do any of this. While the penalties are harsh, compliance efforts are limited due to tax office resource constraints.

There have been Hawaii legislative efforts to have VRBO and others either collect the tax and remit it directly, or provide the state with the renters names, addresses and GET/TET license numbers, but the last years efforts were vetoed by the governor. Most of this is directed at the residential neighborhood rents, but does capture timeshare rentals also.

Bottomline, someone that complies with the law is taking a 15%+ percent hit against non-complying rentals offerings, and a whole lot of compliance time.
 
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