A new proposal between the status quo and an outright Maui vacation rental ban. But what are the other implications of this latest proposal? One significant consequence is that it might lead to higher rates for vacation rentals.
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79 thoughts on “Tax Increases for Maui Vacation Rentals: The New Middle Ground?”
The frog is in the water and the hotel consortiums are turning up the heat.
Not a penny of the profit of the large hotels stays in Hawaii.
The hotels need to be contributing a lot more to the county than the few STR’s. I couldn’t afford to but now and pay all the fees. The hoa fees and lease are higher than my mortgage and I bought 25 years ago. No working local could afford that with what their new mortgage would be. We haven’t even talked about the assessments to do the upkeep of our old building. You can’t have more than 1 car. There is no place for kids to play on property with the rules. You have to go to the park as are beach went away when the county choose to make the harbor larger. Ruining our coastline/ beach. Putting all of our properties in jeopardy.
They need to be taxed as much as str’s or more as they make way more money than we do. I don’t make enough to pay for it by no means. It is my favorite place even though right now only about 5 months. When family obligations are over hoping for full time.
Le petite grenua? They will be serving them for dinner at a high price at some fancy restaurants.
Aloha – the County has had decades to address the affordable housing shortage on Maui, especially West Maui but seems only capable of slowly approving 1 -5 acre lots on the west Maui hills which addresses the housing shortage for rich and famous but does nothing for local residents. There is plenty of land to build affordable housing but there is a lack determination to just get it done. We need to look at the elected officials as to why there is no affordable housing.
This proposal sounds like a promising solution to the issues facing Maui. This is a more practical approach to helping the island’s financial issues, housing issues, and tourism concerns.
Aloha – the County has had decades to address the affordable housing shortage on Maui, especially West Maui but seems only capable of slowly approving 1 -5 acre lots on the west Maui hills which addresses the housing shortage for rich and famous people but does nothing for local residents. There is plenty of land to build affordable housing but there is a lack determination to just get it done by County Officials. Just tax dollars lost in a single year would pay the needed housing.
They were too busy building huge resorts everywhere. If you build them , they will come. And, they did!
We have rented a condo for a month for 8 years. With the current bad attitude towards tourists we will not return. High rates, expenses food costs, expensive car rental plus rude people make it an easy decision to spend our $$$$$ elsewhere. Too bad we loved it there but will not ever return
Welcome back to the British Monarchy. Tax the “rich”! This effort, if implemented, will be another policy failure.
These two “scientists” are trying to solve a long-term problem through immediate actions. This issue took decades to build and will not be solved overnight.
Here’s a hint on how to solve the problem short and long term… change your building/land use policies and build more homes. Build new starter and mid income homes near workplace centers. Build residences that will last for the long-term for Hawaiians of all generations. Building homes creates an economic boon during construction and will grow the local economy beyond tourism dollars.
There are lots of investors who will be happy to invest in increasing the housing supply in Hawaii, and on Maui.
Build a solid future on growth, not taxation and policy restraint.
Let the people of Hawaii prosper. House Hawaiians. Stop trying to tax your way out of the failure of your past elected leaders.
Yes, but… only Past elected leaders?
A 2022 UHERO study (same group that wrote this blog) found that Hawaii has 2 1/2 times more regulations on building that any other state. Regulation = permit delays = $$$. That’s why our housing experts keep saying, “The government just needs to get out of the way.” An unintended consequence is that smaller construction firms can’t build on Maui because they can’t wait a year or three for a paycheck. It would be great if UHERO could be consistent with their research and reference previous findings. Just calling for higher taxes is political – a way for the mayor to “escape” his stupid bill that is tanking Maui’s economy.
That might explain why so many of the houses that were taken out a few years back by one of the Kilauea eruptions were discovered to have been built without permits.
Jeff S.:
Same thing in the 2018 Wainiha flood on Kauai. All manner of damaged and totally destroyed “homes” (my use of scare quotes if you saw some of them) and the county would not let them rebuild because they were never permitted to begin with because – ready for this? – they were in a location prone to flooding, and the building should be elevated.
When we were house hunting on Kauai in 2008 (after the housing bubble “pop”), way more houses had non-permitted additions than did not have them.
Mary, the flaw in what you wrote is that there will be few investors who want to help build in Maui. This is because of the unstable government, that engages in the misappropriation of private property, the horrible tax structure for investment, and many other anti-investment policies. No intelligent investor is going to put money into a place where their money is just going to get confiscated one way or another.
Again if they do this increase and force out people like our friends who have owned a property in Maui for two generations my attitude will change. We will go from using small local owned stores and restaurants to big box and chain restaurants. My reason is that this is caused by the same locals that make it abundantly clear that we are not welcome in Maui. I also think many tourists will go elsewhere. We are looking for places in US mainland as it will save airfare as well. We currently travel to Maui at least twice per year and send family as well. We also go to other islands. We are not rich just make great use of timeshares.
I suspect the Minatoya list ban on STRs will fail to achieve the desired outcome for all of the previously outlined reasons, not the least of which would be the cost of purchasing these properties and ongoing HOA or maintenance fees.
Instead, the county needs to put a moratorium on any New development other than workforce housing.
No shady backroom deals with developers and greased palms that call for an infinitesimally small percentage of below-market rates in exchange for luxury homes sold to off-island investors.
Look at expanding the emergency housing built immediately following the aftermath of the fire, and turn that into a permanent subdivision with convenient goods and services.
Use higher property taxes on STRs and unoccupied luxury homes to fund these projects.
Good idea until you talk about more taxation, We already pay more taxes than everybody else. Believe it or not the majority of STR owners only own 1 maybe 2 and don’t think because they Evan own 1 that were rich. A lot of owners bought when pricing was at least somewhat affordable and want to use as a place to retire or just use when they visit and rent out to help cover the cost of ownership. Everyone is different nobody knows how they came about owning. Trust me its no easy feat with cost of HOA and now taxes. Cost of ownership is extreme on the mainland also don’t think it’s only in Maui it’s everywhere. Some people were just fortunate enough and disciplined enough to get a down payment for what they have. I guess we can call everyone rich that owns in Maui by the standards made in the comments on this thread.
Isn’t taxing into compliance illegal taking?
We travel to Hawaii 1-3 times a year, for 2 weeks at a time. As we read about the Maui turmoil with STR’s, we have lost the desire to go to Maui. This current article reinforces the notion that we won’t be able to afford a trip to Maui in the near future.
You know, with all those millions that the HTA gets to ‘promote’ HI, why not just shut HTA down and take that money to start building ‘affordable’ housing units for the needy??? After all, it’s not like HI really needs to be ‘advertised’ to the world as a great vacation (but you can’t afford to live there) spot??? Government money and Federal grants redirected to build a place to live for those in need (not to sell to affluent off-islanders).
Agree. HTA is just free advertising for the big hotels and resorts.
Mauvelous! New taxes. For some unfathomable reason, those overpriced hotels that rake in 10s of millions of profits every month (or more) pay a lower tax rate than the small (27 units) time share I belong to, which pays next to the highest rate in the state???? If you want to tax the real profiteers in HI, that charge for everything except the air, those affluent hotel owners would make an easy target. But then, they also have the money to deflect the tax man and ‘support’ the local elected county and state officials and legislature. Shutting down or up taxing the STR owners will not make ‘affordable’ housing available. Little housing in HI is. Like lobster on the restaurant menu, it’s ‘market price.’
One of the aspects of this proposal to increase taxes on vacation rentals does not address that most all businesses need employees. Those employees need housing. The increase taxes should be shared amongst all businesses so that we can house the people and their families that are employed. One aspect of this could be through commercial property taxes, and or through corporate tax to help pay for worker housing. This is not a single obligation of anyone type of business. This should be shared amongst all businesses that need employees and need affordable housing for those employees. This includes all businesses that need employees i.e. hotels, box stores, building contractors, and all businesses that need employees. Why is this proposal only focused on one type of industry i.e. short term vacation rentals? If you don’t agree, please explain why! Most of us agree, we need affordable housing, it is of my opinion. It should be shared amongst all businesses!
Well said, Captain Steve!! I agree it seems both unfair and unrealistic to punish one sector in raising already exorbitant taxes. As evidenced by very little rebuilding and new builds post the horrific fires, much work needs to be done to alleviate unneeded delays.
Btw, have done many whale watches with you over the years, and loved every one! So sorry to hear you lost your fleet in the fires. I pray you can bounce back stronger than before. 🙏. Maui continues to be in my thoughts and prayers. 🥺🙏🙏🙏🙏
If my owner-occupied taxes go up $.01 because of this knee-jerk response from the Council and Bissen, they can all consider this their last terms.
We need business decisions, not emotional responses to loud voices that speak only for the minority.
The math ain’t mathin’
Gov Green’s emergency proclamation and Hawaii tenant imbalance, places a landlord in an untenable situation.
You say “Some properties may, of course, as many of you have suggested in comments, remain as vacation homes or empty investment properties. Therefore, UHERO suggests that Maui County should consider implementing a property tax hike on these as well to ensure the desired goals are met.”
Instead, why doesn’t UHERO advise that landlord rights become the standard. At this point landlords of a sound mind would be foolish to rent a residence in Hawaii. Accordingly, the policy makers should be mindful of potential landlord protections if they wish to promote landlord action. Most of the seasonal owner occupants can’t meet the minimum 6 month rental term standard, and are afraid they can’t evict a bad tenant. Stalemate!
Actually, owner-occupied taxes have steadily declined the last five years, inversely related to the increase in STR tax rates, while hotel taxes have stayed flat (and they are assessed at a fraction of their true value) Meanwhile, the assessor raised all STR assessments 20% – 40%, so that this year’s 14% increase was actually double that. STRs might still have been ok, but all the negative publicity is driving away visitors, as you can readily see in all the postings from people vowing not to come back. So yeah, our owner-occupied taxes probably will go up, because Bissen and Rawlins-fernandez killed the golden goose.
On a semi-related issue, I was talking to some friends who own a condo in Kihei . They say that a private company was hired to deal with permits and whatnot in Lahinia, and is issuing them…. which the County is rejecting/ignoring/denying, preventing people who are ready to rebuild from being able to.
I don’t think I’ve seen anything on that here.
How will this new tax affect time share owners
Time share & hotels are Immune! they are only scapegoating vacation rental owners.
Time share & hotels are big corporations = lots of money for lawyers. Short term rental owners are mostly independent / unorganized = almost no money for lawyers.
When STR’s are gone and “affordable housing” is not “fixed”, the locals who don’t move away will have much tougher corporations to fight against. This is a fight they cannot win.
Being the landlord for a long term rental is not for the faint of heart. My experiences include the ex-wife of a very well known singer, who, 3 months into a one year lease, decided she didn’t have to pay rent, tried to turn my house into a yoga studio, and reported me to the town board of health because the lease stated she was responsible for snow removal and she did not want to pay for it. Cost me thousands for eviction, which even though the court ordered her to pay, she did not. If I had a property on Maui, I would not convert it to LTR. With STR, people are here & gone & if they are obnoxious, you never rent to them again. Also, why is raising taxes on a specific group, the solution to everything??
The landlord tenant laws are completely out of balance. As you mention it takes a lot of time and money to evict someone. We have people behind rent over $10,000, people that I’ve tried to burn our house down, tenants dogs that completely devastated the interior of our home. And the list goes on again. The landlord tenant laws need to be more balanced. And we need to screen tenants better. And have stronger lease contracts. Housing is needed, but so is respect from both parties for each other, and the property!
Maui has had an eviction moratorium in place since the fire and there’s no indication when/if it will ever end. So paying rent on a long term lease is strictly optional. In my estimation, this eviction moratorium is the biggest reason why long term leases are hard to find and part of why they’re expensive. The typical landlord who relies on revt payments to pay a mortgage, property taxes, insurance, etc. cannot afford to risk renting long term.
So does this mean it’s not about housing shortages. Sounds like It’s about more money for the government. So was the whole thing made up to tax more. Just confused
The government has not created affordable housing.
To distract from their doing nothing, they are blaming the STR’s that they permitted & tax.
1. If they scare STR owners, or tax them to death, many will sell, a few will convert to LTR (see – it’s working).
2. With less tourism comes less jobs – so people will leave Maui.
3. With less people, less housing will be needed – pop the champagne, it’s time to celebrate! The lack of housing problem was solved by killing STR’s!
4. Re-election & pay increases for a job well done!
*Banning vacation rentals doesn’t help Maui residents “afford” housing, it just creates loss of jobs and tax revenue in a place where NO OTHER signifiant industry exists
*Current vacation rentals are not necessarily adequate or affordable for local residential use
*The county can’t take care of it’s people by losing jobs or tax revenue. Rental owners aren’t going to just “give” their units to the county or take losses on their investment. Tourism should be embraced, and its associated tax revenue should be Redirected toward a significant interest rate “Buy Down” for qualified residents so that they can afford homes (One Time Use – to eliminate fraud), rather than the government wasting that money on “projects” that aren’t as important.
To me, it seems like a much better use of the tax revenue. It also doesn’t eliminate jobs or decrease current tax revenue. Tourism should be embraced and the government should spend that money more wisely.
This is exactly the point I made yesterday. Any taxes effect all people somehow. I realize this study was not conducted by the government of Hawaii, but it could have been. Throwing money at it will not fix your problems. New leadership may not fix it either But the people of Hawaii will never know because they refuse to change.