Hawaii accommodation tax

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Hawaii accommodation tax

Is Airbnb collecting Hawaii state accommodation tax yet?

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Stephanie
Community Manager
Community Manager
London, United Kingdom

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101 Replies 101

We are new hosts on airbnb (condo on Molokai). 

We currently charge a flat nightly rate (with a weekly and monthly rental discount), cleaning fee and security fee.

We are not adding taxes to the fees because we are not sure how to (#1) figure the tax rate and (#2) how to add it onto the charges on Airbnb for our guests to be able to see when they are doing a search or making a reservation.

Can anyone advise?

Mahalo,

Lisa K

Lisa & Gary,

 

This is the way I compute the Gross Rental Income.

 

If we start from the amount paid to us by Airbnb, we must work backwards to figure out the Gross Income amount.  So, impute the taxes and then back out and determine the Gross Income from the payment - in one stroke:

 

I use this formula: Gross Rental Income = Payment Received from Airbnb / (1+(.0925+.0450)); where the .0925 is the TAT and the .0450 is the Honolulu GET.  When I have Gross Rental Income solved, I then multiply it by 4.5% and 9.25% to determine the amount of TAT and GET due to the State Tax Collector.  It results in paying less GET and TAT than you would pay by multiplying each tax rate by the amount you got from Airbnb.  The results can then be used to report to the State Tax Collector.

 

Hope it works for you.  I am not an accountant or consultant, just a guy that tries to figure these things out.

dean

Aloha Dean,

This has been such a pain and for several years I have been trying to work the numbers so that I am not paying taxes on the taxes. I have always included the taxes in my price, but what a pain when it comes to paying my GE and TA taxes quarterly. 

Complaint #1 - not everyone is charging or paying the taxes so this puts those of us who are paying at significant disadavantage.

Complaint #2 - Paying the GE and TA taxes on the "gross" income when the taxes are already included in the price.

Complaint #3 - it is stated that in Hawaii the taxes MUST be a separate line item charge for the tax not to be taxed - I get your math, but how do you create and keep a record of the line item charges if you were to be audited? With the payout on Airbnb it is not possible to have a separate line item for the taxes so that you are “visibly passing the tax onto the customer”  which is what the state requires.

Does any of this make sense?

I recently lowered my prices and put in my listing that I had lowered my nightly rate and would collect the taxes upon arrival (it would work out the same for my guests) - but everyobody who contacted me questioned me about it and made me feel like I was scamming them!

Oh well, back to the drawing board....

Let me respond to your #2 and #3.

 

My approach to the tax was to increase the posted rate and also state in my basic property description that the GET (4.5%) & TAT (9.25%) were included in the price.  Then, in my welcome note to guests,  I say that once again and state each of the tax amounts  included in the rent payment reported by Airbnb.  The total of the three amounts (includes the computed Gross Rental Income) will match what you received from Airbnb. That satisfies the "Visibility" example shown in the TAT pamphlet.

 

If the Tax Collector asks for proof of visibility I will show him/her the welcome letter.

 

No customer kickbacks yet.  I've had at least ten tenants since I applied the procedure.

 

Hope this works for you.  I just finished working the quarterly and annual returns for Hawaii.  The process is convoluted, but worth the walk-through if you have time like me.  Like finishing a homework assignment and actually understanding what you've done.

 

dean

 Thanks for that! 

Have sent the welcome letter with visible tax line items to my first guest without problems.

Much Aloha,

Alison

 I have a question about paying for GE and TAT. We are wanting to do AIR BNB and have read all the comments and this is the reason why I am contacting you since you know more about the taxes in Hawaii. So we are still paying mortgage for a townhouse around 1800+ will HOA fees. We have GE tax license since we were renting it yearly before. so because we want to start Air BnB for the townhouse we know we have to pay for TAT license. But how does it work when we have to file it. with GE tax we file it every 6 months. We collected 1975 from our renters in the past and reported that full amount x6 months. But with TAT how does it work when it asks to report the gross income and how do we calculate for what we pay for GET and TAT. Your help and understanding is greatly appreciated. Thank you so much.

I file quarterly on both taxes because I got a notice to do so. It’s okay and easy to file using the new Hawaii Tax Online website. It’s a struggle to set up but that’s because I have a negative attitude toward paying this high tax. 

 

I also limit collection to only what I get from Airbnb. I.e. I don’t collect taxes from tenant. That means I must make taxes visible as required by tax office. 

 

I make this clear clear on my Airbnb listing. This means I need to pump up the price to include taxes. 

 

Hope this helps. 

Glenn26
Level 2
Hawaii, United States

I believe there is a Bill currently or about to be voted on in the Hawaii State legislature that would require Airbnb to collect TAT taxes for anyone doing short term rentals in the State of Hawaii. It's purpose is to ensure anyone doing short term rentals pays the TAT tax, ie has a TAT license number. It seems like in the future should this Bill pass legislation that Hosts would be required to have aTAT license to list on Airbnb's website. Basicly it is all about policing those who are not playing by the rules ie paying the TAT tax.

Aloha Local Airbnb Community,

 

Ok, so I rent and live in a downstairs 'ohana' that I have listed one bedroom with accomodations

on Airbnb.  The owner of the property lives upstairs and has approved of my listing on Airbnb.

I just got an e-mail via the owner of the property  from a neighbor that is:

"FILING A COMPLAINT"

"YOUR TENANT IS RUNNING A BUSINESS ON OUR STREET!!!!"  

I did some research and found as of January 1, 2016, "associations of apartment/unit owners will

no longer be required to report relevant information for units being operated as transient accomodations."

I am headed to the planning department in Wailuku tomorrow to ask more questions.

What are the possible ramifications this complaint could cause?

 

Mahalo for the support,

 

Bonnie

 
 
 
 
Glenn26
Level 2
Hawaii, United States

Will Airbnb charge the hosts administrative fees to collect the Hawaii TA tax?

I don't see where Airbnb has offered to collect taxes for hosts.  It would be really impractical for them to do so and if they offered this service, I would refuse and choose to do so myself.  The prospect of changes in rental rebates, increases or length of stay would end in a hopelessly complicated resolution process that would leave all in confusion.  What's more, the process opens us up to tenant disputes.

 

See my earlier approach to calculating the VAT / TAT and look at Gov. Ige's pamphlet for figuring these things out.  I get 10 tenancies per year and calculate these out on a spreadsheet.  First time is a struggle, but after that the calculations move fast.

 

Dean

Sunshine1
Level 2
Volcano, HI

Aloha and good morning! Do I need to get a GE Tax

License before hosting? 

Yes. Here is the basic information:

http://files.hawaii.gov/tax/legal/brochures/renting_residential.pdf

You can find out the details on their website. You need both GE and TA licences to host.

Mahalo Elena!!! 

Aurora18
Level 4
Santa Clara, CA

I'm about to be a new homeowner on the BI and will have two Airbnb rooms in my new home.  I just want to say a big Mahalo! to everyone here for assisting me in finding the required paperwork to operate my venture with integrity.  You made it easy!                  

 

I read a post by Momi saying to use Airbnb's feature for collecting or refunding additional costs to collect the GET* and TOT from guests.  To the point made by another poster, I'm wondering if the use of this feature will show a separate line for the collection of the tax.   Has anyone here had experience with this?

 

Further, are there any other suggestions you would have for me as a new Airbnb in Hawaii?  I've been successfully operating two Airbnb spaces in Santa Clara, CA for nearly two years now with over 700 nights booked.  I'm planning to have the Big Island Revealed book available for guests to peruse and to welcome them to my home with a flower lei.  We also plan to provide all the usual beach gear.  What else would you recommend?

 

Mahalo to you, my new ohana,

Peri

 

*GET = General Excise Tax