Oahu short-term rentals back in business after long pandemic shutdown

Short-term rentals on Oahu have reopened for business after being shut down since April due to the COVID-19 pandemic. The island has moved on to its next phase of economic reopening, which includes allowing legal vacation rentals to operate.

Hawaii is now allowing tourists to visit without a mandatory 14-day quarantine if they’ve tested negative for COVID-19 up to 72 hours before their flight. More than 8,000 travelers flew to Hawaii on October 15, the first day of the new rules.

Short-term rentals on Maui, the Big Island, and Kauai were allowed to get back to business in June for guests not subject to the state quarantine that was in effect at the time. However, visitors were not allowed to quarantine in short-term rental properties.

Oahu has strict rules for vacation rentals, allowing only around 800 unhosted, whole-home rentals, called “transient vacation units,” in specific areas. A law passed in 2019 allows approximately 1,700 hosted units (called "bed-and-breakfast homes") to operate on the island. That law was supposed to go into effect this month, but a current bill could delay the start date for permits to January 31 as a result of the pandemic.

Short-term rental platforms such as Airbnb and Vrbo must take down Oahu listings that don’t include permit numbers. They must also submit hosts’ information to the government, including names, addresses, tax identification numbers, length of stays, and amount paid. 

Another law passed late last year created a new property tax classification for bed-and-breakfast homes and placed transient vacation units into the existing hotel/resort property tax category, rather than the residential category. Both 2019 laws were aimed at clamping down on illegal short-term rentals.

All Hawaii vacation rental hosts must also comply with tax regulations. Short-term rental income in Hawaii is subject to transient accommodations tax (TAT) as well as general excise tax (GET). Vacation rental operators can pass these taxes on to guests, but hosts must register with the state, collect and pay the taxes, and file regular tax returns. 

While short-term rental platforms collect taxes on behalf of their hosts in many states, they’re not allowed to do so in Hawaii. That means hosts are responsible for taking care of tax obligations. MyLodgeTax can help Hawaii short-term rental hosts by automating tax compliance.

For more on lodging taxes in Hawaii, see our state Vacation Rental Tax Guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.