Non-Hawaii Owners of Vacation Rentals in Uproar
02/28/2012
Flickr: Steve Isaacs
Owners of vacation rental properties in Hawaii are rallying support to defeat several bills they say would add thousands of dollars a year to the cost of renting out their places.
Internet sites including Facebook have been lighting up in recent days as more property owners are learning of the debate as the bills move through the legislative process.
Three bills pending before the Hawaii Legislature would require owners of vacation rentals who live on different islands or out of state to retain local management of the units.
Critics say the bills would greatly increase their management costs while supporters argue that millions of dollars in revenue are leaving the state.
"We perceive that this is not about taxes per se, but really about a money grab by the Realtor family and all the associations and individuals connected to that," said Meera Kohler, an Anchorage, Alaska, resident who is co-owner of a Maui condo. "They see it as an opportunity to get management fees to manage. It would be a huge loss of revenue for us — very, very crippling."
But Patrick Sullivan, principal broker and owner of Lahaina-based Sullivan Properties, said the state is losing millions because nonresident owners aren't paying the proper taxes, something owners like Kohler say simply isn't true. "Funds not being collected have to exceed $30 million a year and growing," Sullivan said.
It's unclear how much the state may be losing through unpaid taxes. There's no fiscal information presented with any of the legislation.
But a conference committee report on one of the bills cites a 2005 study by the Hawaii Tourism Authority that estimated as many as 9,000 rental units in Hawaii may not be complying with tax law.
Because real estate agents are required by state law to protect consumers, said Sullivan, nonresident owners should use the local agents to collect rental monies to insure that Hawaii gets paid its general excise and transient accommodations taxes.
