WAILUKU, Hawaii — A nearly 29 percent property tax hike is under consideration for Maui homeowners who rent out their non-primary residences as transient vacation rentals.
A transient vacation rental is defined as any housing unit rented for less than 180 days in which the owner or manager does not live on the property, according to Maui County’s website.
The Maui County Council’s Budget and Finance Committee is studying the measure, which would reclassify those properties from commercial to the hotel and resort classification, The Maui News reported Wednesday.
The proposal would not affect property owners who use their primary residences for a permitted bed-and-breakfast or transient vacation rental.
Scott Teruya, the county’s Real Property Tax Division administrator, said the change if approved would affect 186 housing units and generate $640,000 in additional country revenue.
Teruya and committee Chairman Riki Hokama said that prior to a change in 2014, non-primary residences used as vacation rentals were in the hotel and resort property tax category.
Council Member Don Guzman, however, said there would be issues with the proposal because short-term and vacation rentals are not the same as hotels and resorts that can build more on their properties and have businesses on them.
Thomas Croly of the Maui Vacation Rental Association testified against the bill.
Croly said the issues surrounding this bill were ironed out in 2014 when the short-term rental home permit holders were placed into the commercial category if they conducted the rentals on non-primary residences.
In his written testimony, Croly referred to a council committee report in 2014 that said having short-term rental home permit holders pay the hotel or resort tax rate would negatively impact the legal operators who abide by the law, compared with illegal operators who operate with no permits and are taxed at the lower-rate property tax category.