The era of flying under the radar might be finished.
For years, an unknown — but some say increasing — number of homeowners have quietly rented out their properties to visitors on such online clearing houses as Airbnb and Vacation Rentals By Owner.
On the latter site, there were 3,810 homes available this week on the Big Island for various costs and lengths of stay. Some are operating by the book, paying a total of about 14 percent in combined general excise and transient accommodations taxes to the state.
But others are not.
“That’s not fair to those who go through the proper process,” said Kona Sen. Josh Green, who introduced a bill that would require all vacation rentals to be licensed annually under the state Department of Commerce and Consumer Affairs.
“It’s about a level playing field,” Green said. “And, we’ve been told there was as much as $30 million to $50 million in taxes a year that would otherwise have been paid.”
The rental owners would have to demonstrate they’re paying taxes, and their business information would be placed on a state list that would be available to county officials enforcing zoning laws, under the proposed law.
Counties also lose out on commercial property tax revenue when a vacation rental receives homeowner discounts on property taxes on a residence actually being used as a business, the bill states.
Because there isn’t much information about how many rentals are out of compliance, Green said he’d be open to implementing the rule slowly while information is gathered, and would support an amnesty period for those coming into compliance.
“If we can implement this over the next four to five years, it would be better for everyone,” Green said.
Illegal vacation rentals are hurting Hawaii on several fronts, according to the bill. A housing crunch is worsening in part because homeowners are turning their investments into more profitable short-term vacation rentals rather than long-term rental housing normally geared toward residents. And the rentals are competing directly with permitted hotels, bed-and-breakfasts and other establishments that do pay their taxes.
Some 40 percent of vacationers to the Aloha State stay in vacation rentals, according to the Hawaii Visitors and Convention Bureau.
Past attempts to more closely regulate vacation rental operations failed at the Capitol, opposed by such groups as the Hawaii Rental By Owner Awareness Association.
Green, who submitted the current bill with four co-sponsors, said he is not sure if the legislation will be met with support.
“I’m not trying to over-regulate,” he said. “I’m trying to make sure everyone is treated the same way.”
Email Bret Yager at byager@westhawaiitoday.com.
