VRBO crack down Maui

[easyrider]

I was reading that very soon that many VRBO in Maui will be getting caught and fined. The problems were finding these rentals but a company has been hired to find these rentals. The fines may go from $1000 to $20,000 with a $10,000 a day added feature.

I wonder what would happen if a renter was in one of these units when it was busted. This crack down, if successful, might make it worth while to rent Maui timeshares as a safer option to vrbo type rentals.

Bill

https://www.mauinews.com/news/local...-cracking-down-on-illegal-short-term-rentals/

https://www.kitv.com/story/40983007...on-maui-could-jump-from-dollar1k-to-dollar20k

 

[Luanne]

What exactly makes a short term rental illegal? We currently have a rental through vrbo for next year. These folks have been renting for a long time.

 

[CalGalTraveler]

I was unaware Maui had any legislation on ST rentals. Are these rentals that don't have a rental license filed in the County? (essentially a tax) Or have they banned short-term rentals in certain neighborhoods similar to Honolulu?

 

[Luanne]

I was unaware Maui had any legislation on ST rentals. Are these rentals that don't have a rental license filed in the County? (essentially a tax) Or have they banned short-term rentals in certain neighborhoods similar to Honolulu?

Well, I found this:

"Along with short-term rental permits, Maui short-term operators are also required to have licenses for Transient Accommodations Tax (TAT) and General Excise Tax (GET)."

So I guess they are going after the rentals that aren't in compliance with all of that. I would think/hope that sites like vrbo would require this from those who post rentals.

I went back to the confirmation I received for my vrbo rental and it has "tax" shown, but doesn't break out the various taxes.

 

[controller1]

What exactly makes a short term rental illegal? We currently have a rental through vrbo for next year. These folks have been renting for a long time.

You should be able to see if your rental is legal through the following from the article:

To view a list of lawfully operating condos, apartments and planned developments, excluding hotels, visit mauicounty.gov/121/Planning-Department. Under “Hot Topics,” select “Short-Term Occupancy List.” To see a breakdown of permitted transient vacation rentals, short-term rental homes and bed and breakfasts, visit mauicounty.gov/1377/Short-Term-Rentals.

 

[Luanne]

You should be able to see if your rental is legal through the following from the article:

To view a list of lawfully operating condos, apartments and planned developments, excluding hotels, visit mauicounty.gov/121/Planning-Department. Under “Hot Topics,” select “Short-Term Occupancy List.” To see a breakdown of permitted transient vacation rentals, short-term rental homes and bed and breakfasts, visit mauicounty.gov/1377/Short-Term-Rentals.

Thanks. It's hard to tell from that list though. The rental is at Maui Hill, which is on the list. But Maui Hill is a combination of timeshare units, hotel units and fully owned units. What we've rented in the past, and plan to rent next year, is a week of one of the fully owned units. Maybe since the entire complex is listed the individual owners are covered under that as well.

 

[easyrider]

Maui County permitted bed and breakfasts.

https://www.mauicounty.gov/DocumentCenter/View/11127/Permitted-Bed--Breakfast-List-07012019?bidId=

Maui County permitted short term vacation homes.

https://www.mauicounty.gov/Document...-Short-Term-Rental-Homes-List-07012019?bidId=

Maui County permitted short term transient rentals.

https://www.mauicounty.gov/Document...ransient-Vacation-Rental-List-07012019?bidId=

It looks like every condo would fall under the regulations meaning a person renting their own condo would need to be approved to rent it short term.

Bill

2. If the applicant does not own all condominium units on the lot, each condominium unit will be considered a lot for purposes of this chapter and each unit owner will be eligible to apply for a short-term rental home permit, except that no owner may hold more than one short-term rental home permit.

 

[LisaRex]

It looks like every condo would fall under the regulations meaning a person renting their own condo would need to be approved to rent it short term.

From the link that you provided:

"There are more than 16,000 units (i.e., apartments, condos, houses) that are legally eligible to operate as short-term (less than six months) rentals without requiring a short-term rental permit. These units are generally located in districts zoned for hotel use, but some are also located in apartment districts, or are covered by other pre-existing situations."

I'm sure that many VRBO rentals fall into this exception because they are located within hotel districts. Honua Kai, Ka'anapali Ali, Ka'anapali Shores, Makena Shores, Polo Beach Club, etc, etc. are all intermingled with hotels and resorts, so I imagine they'd be exempt from obtaining a short-term rental permit.

 

[jehb2]

What exactly makes a short term rental illegal? We currently have a rental through vrbo for next year. These folks have been renting for a long time.

I know that for Airbnb if you click on the "read more about space" link and stroll down to the bottom, if the place is legal you will see:

License and Registration Number

00000000000

Sometimes I see places list their Tax ID. Whether or not a city requires this depends on the city. But if I'm looking for an apartment in Rome and I see that some apartments have numbers and some don't, I'll only rent an apartment that has one.

 

[CalGalTraveler]

I know that for Airbnb if you click on the "read more about space" link and stroll down to the bottom, if the place is legal you will see:

License and Registration Number

00000000000

Sometimes I see places list their Tax ID. Whether or not a city requires this depends on the city. But if I'm looking for an apartment in Rome and I see that some apartments have numbers and some don't, I'll only rent an apartment that has one.

This is a good practice and a great way to ensure the rental is legit. We own a VRBO/AirBnB rental and we are required by the local government to list our license number at the bottom of the advertisement.

Another clue is if they don't take out transient taxes from your bill. There is nothing to stop them from taking and pocketing it if they are illegal. However, I believe most unlicensed are simply ignorant of the law and don't know to collect it.

 

[easyrider]

From the link that you provided:

"There are more than 16,000 units (i.e., apartments, condos, houses) that are legally eligible to operate as short-term (less than six months) rentals without requiring a short-term rental permit. These units are generally located in districts zoned for hotel use, but some are also located in apartment districts, or are covered by other pre-existing situations."

I'm sure that many VRBO rentals fall into this exception because they are located within hotel districts. Honua Kai, Ka'anapali Ali, Ka'anapali Shores, Makena Shores, Polo Beach Club, etc, etc. are all intermingled with hotels and resorts, so I imagine they'd be exempt from obtaining a short-term rental permit.

I think you are right about the permit exemption. I wonder how the tax gets collected if there is no permit required. Can the owners just pocket the tax if it isn't a mandatory thing ? If the owners never have to register why would they pay tax unless they felt like it ?

Bill

"There are more than 16,000 units (i.e., apartments, condos, houses) that are legally eligible to operate as short-term (less than six months) rentals without requiring a short-term rental permit. These units are generally located in districts zoned for hotel use, but some are also located in apartment districts, or are covered by other pre-existing situations. The operation of short-term rentals in these zoning districts is consistent with current County of Maui zoning ordinances, Community Plans, General Plan, and State law. All short-term rentals are also required to pay State of Hawaii General Excise Tax (GET) and Transient Accommodation Tax (TAT). It is recommended that you inquire with the owner as to whether they are operating in compliance with all current laws."

 

[LisaRex]

"I wonder how the tax gets collected if there is no permit required. Can the owners just pocket the tax if it isn't a mandatory thing ? If the owners never have to register why would they pay tax unless they felt like it?"

My guess is that obtaining a permit to operate, if required, is one step, while registering any rental in order to remit taxes collected is a completely separate step.

Either way, if you rent your home for money, it's definitely mandatory to collect taxes, but I have no idea how Maui collects the proceeds from private owners.

Here is a breakdown of a rental at Honua Kai that I'm eyeing for 2020:

$369.71 x 7 nights $2,588.00
$473.40 fees (Parking Fee $119.00; Administrative Fee $179.40; Cleaning Fee $175.00; Service Fee $291.00)
$403.30 taxes
-----
$3,755.70

FYI, taxes are ~15%. No mention is made of TAT and GET being collected after, so I assume it's embedded in the rental rate...?

I wonder what would happen if a renter was in one of these units when it was busted. This crack down, if successful, might make it worth while to rent Maui timeshares as a safer option to vrbo type rentals.

While it does appear that Maui is going to try and catch illegal operators, the firm they hired is focusing on identifying illegal owners in non-exempt areas such as subdivisions where neighbors have a vested interest in shutting these rentals down (because of the noise/traffic)...and politicians have a vested interest in keeping those potential voters happy. No mention of going after legal rentals that under-report mandatory tourist taxes.

My biggest fear as a renter wouldn't be that I'd be "busted" while I was occupying the place, because it's really a matter between the owner and Maui County, and I'm under no legal obligation to vet rentals for tax collection. No, I'd be more concerned that my rental would be shut down by the county after I booked but before I arrived. IMO, a timeshare rental would certainly be safe because management would be responsible for collecting those taxes. But, I'd also consider a VRBO rental to be pretty safe vs. one off a private website, because VRBO/AirBnB is presumably the first place that Maui County is going to crack down on if the place is illegal.

No matter what, my takeaway here is that I'd be MOST concerned about renting a homes/condos in a residential areas vs. a hotel zone. If I wanted to rent a private home, I'd definitely do my due diligence and ask questions from the owner and/or search the link to make sure the owner has a permit so that I wouldn't arrive on Maui and find my rental unit shuttered.

 

[controller1]

Some related updates . . .

A judge ruled Wednesday that Hawaii tax authorities may subpoena Airbnb for records of its hosts as the state investigates whether operators of vacation rentals have been paying their taxes.

First Circuit Court Judge Bert Ayabe approved the subpoena after a brief hearing. Airbnb and the state Department of Taxation have already agreed which records the company will provide: those of 1,000 Hawaii hosts who received the most revenue from 2016 through 2018.

https://abcnews.go.com/US/wireStory/judge-rules-hawaii-subpoena-airbnb-tax-records-66803476