Hawaii Rental Tax Laws for Property Owners
For property owners in Hawaii, renting a property comes with distinct state tax obligations. Learn to manage these financial responsibilities correctly.
Property owners in Hawaii who generate income by renting their properties are subject to state taxes. This applies to a wide range of rental scenarios, from single-family homes leased for long durations to condominiums offered as short-term vacation stays. Engaging in rental activity is considered a business enterprise by the state, necessitating compliance with its tax regulations. The tax system for rentals includes specific levies on the gross receipts generated from the property, in addition to state income tax.
Understanding Hawaii’s Rental Taxes
Two primary taxes apply to rental income in Hawaii: the General Excise Tax (GET) and the Transient Accommodations Tax (TAT). The GET is a tax on the gross income from all business activities, which includes renting property. This tax applies to both long-term and short-term rental arrangements. The statewide GET rate is 4.0%, but counties can add a surcharge; for example, the rate is 4.5% on Oahu, Maui, Kauai, and Hawaii Island.
The TAT is a tax specifically levied on income from short-term rentals. A rental is classified as short-term, or “transient,” if a person occupies the property for less than 180 consecutive days. This includes vacation rentals and other temporary lodging. The state TAT rate is 10.25% of the gross rental proceeds, which is scheduled to increase to 11% on January 1, 2026. In addition to the state TAT, counties impose their own transient accommodations tax, which can be up to 3%. Property owners with short-term rentals must collect and remit both GET and the combined state and county TAT.
Long-term rentals, defined as those lasting 180 consecutive days or more, are not subject to the TAT. Owners of these properties are only responsible for paying the GET on their rental income.
Registration and Licensing Requirements
Before collecting and remitting any rental taxes, property owners must register their business activity with the Hawaii Department of Taxation. This is accomplished by obtaining a state tax license. The process involves a single application, Form BB-1, the Basic Business Application, which serves to register for both a GET license and a TAT Certificate of Registration.
To complete the Form BB-1 application, you will need your Social Security Number (SSN) or a Federal Employer Identification Number (FEIN) if you operate as a business entity. You must also provide the legal name of your business, any “doing business as” (DBA) name, and the physical address of the rental property.
Once the application is processed, the state will issue a GET license and, if applicable, a TAT Certificate of Registration. The law requires that the name, phone number, and email address of the designated on-island local contact be displayed in the rental unit.
Calculating and Collecting the Tax
The calculation of taxes on rental income can be complex, especially for short-term rentals. The total amount subject to tax depends on whether the taxes are itemized on the tenant’s bill. If the TAT is listed separately and passed on to the tenant, that amount is not subject to GET. However, if the GET is also passed on as a separate line item, that passed-on amount is itself subject to GET. If the taxes are not itemized and are simply included in a single rental price, the entire amount is subject to both GET and TAT.
It is common practice for landlords to itemize these taxes on tenant invoices. This shows the renter the exact amounts being charged for rent and for each tax. While landlords are responsible for remitting the tax, passing the cost to the tenant is a standard and legal business practice.
Filing and Paying Your Rental Taxes
Property owners must file returns and remit the collected taxes to the Department of Taxation. The filing frequency—monthly, quarterly, or semi-annually—is determined by the amount of your annual tax liability. The state will assign a filing schedule upon registration. The deadline for periodic filings is the 20th day of the month following the end of the filing period.
Separate forms are used for GET and TAT.
- Form G-45 is the periodic return for GET.
- Form G-49 is the annual summary return for GET.
- Form TA-1 is the periodic return for the Transient Accommodations Tax.
- Form TA-2 is the annual TAT reconciliation return.
Property owners have two primary methods for submitting their tax returns and payments. The most common method is through the Hawaii Tax Online portal, which allows for electronic filing and payment. Alternatively, you can mail the paper forms along with a check for the tax amount due.