Maui County: Vacation Rentals

Posted by Courtney Brown on Friday, December 9th, 2016 at 3:38pm.

Maui County Vacation Rentals

Many prospective buyers of Maui real estate as a second home or residence often will ask about Short Term Rentals. After all, Maui is an idyllic spot and while most owners would like to spend all of their time here, obligations at home often limit their use of the property.

Kaanapali Beach on Maui

WHAT IS A SHORT TERM OR VACATION RENTAL?*

Maui County defines short term or what are commonly known as "vacation" rentals as anything less than 180 days, with rentals under 180 days allowed on properties located within what is defined as the Hotel District.

Many condominiums and subdivisions zoned in the Apartment, Agricultural or Residential districts, had rules and guidelines allowing short term rentals in their governing CC&R's (Covenants, Conditions & Restrictions), many of which conflicted with the county definition of short term rentals.  

MAUI CONDOMINIUM VACATION RENTALS

Some condominiums fall under the Hotel District and allow vacation rentals, while many fall within the Apartment District.  

In 1989, an ordinance (1797) deleted transient vacation rentals as permitted uses in the Apartment District, which is the zoning for many condominium communities here on island.  A request for a legal opinion came about in 2001 to determine which apartment zoned units are excluded from the prohibition on transient vacation rentals.  

In response to this request, the legal opinion known as the Minatoya Opinion, was issued: 
"We believe that Ordinance No. 1989 (1991), effective March 4, 1991, completed the task of deleting transient vacation rentals as permitted uses in the Apartment District. Thus, March 4, 1991 is the effective date for excluding transient vacation rentals in the Apartment District. An exclusion to Ordinance No. 1989 (1991) is apartment units operating as a transient vacation rental on or before March 4, 1991. Accordingly, to be exempt from the short-term vacation rental prohibition in the Apartment District, an apartment unit must have been operating as a transient vacation rental on or before March 4, 1991, OR have had a lawfully issued and valid building permit, special management area use permit, or planned development approval on April 20. 1989."  

This opinion, which reported by the Realtors Association of Maui, affects over 80 condominium communities in the apartment zone and about 8000 properties.  Many properties that meet the guidelines stipulated in the Minatoya Opinion operate as short term rentals at the time of this post.

MAUI HOMES: VACATION RENTALS AND SHORT TERM RENTAL HOME PERMITS

In later years, as the luxury home vacation rental market began to blossom, the question then became how to address short term rentals of homes (many of which are in Agricultural or Residential Districts).   Some properties were operating as Bed and Breakfast rentals under Conditional use permits or B&B permits where owner-operators were onsite. However, this did not address rentals where owners were off island in areas and/or where the zoning did not permit short term rentals.  

In response, the County of Maui implemented the Short Term Rental Home permit process under specific restrictions and guidelines. Set forth under section 19.65.030 of the county code, this permit process facilitates "the permitting of short-term rental homes in certain areas, subject to appropriate restrictions and standards; to allow for varied accommodations and experiences for visitors while retaining the character of residential neighborhoods; to allow small businesses to benefit from tourism; and generally to implement land use policies consistent with the County of Maui’s General Plan and the State of Hawaii’s land use laws."*

There is an application process for STRH Permits, as well as a current restriction on the number of rentals in each district.  The chart below details the limits and number of STRH permits for each area as taken from the county website.  Note: some of the areas have "caps" such as Maui Meadows, located in the Kihei-Makena district, which according to the County website has reached its cap of five STRH permits.***

District Limit      Number of active STRH Permits***
Hana  30  15
Kihei-Makena    100   32
Makawao  40  8
Paia/Haiku  88  40
Wailuku  36  4
West Maui  88  41

For anyone with questions regarding Short Term Rental Home Permits, including the application process, renewals, a check list to determine if your property qualifies, and a list of properties with the STRH permit, please visit the County of Maui's website and search STRH or Short Term Rental Home Permits. 

 Notes:
*This post is not a representation of what properties are legally eligible to be rented short term or the tax consequences of owning a short term rental.  All readers should consult with the appropriate professionals, including but not limited to permit consultants, accountants, and legal counsel, along with the County of Maui should you have any questions about the eligibility of a property for short term rentals and the tax implications.
Per the county website all operators of Short Term rentals must collect both Transient Accommodations Tax (TAT) and General Excise Tax (GET).
**quote from County of Maui Website
***taken from the County of Maui Website on 12/9/16 and details information dated 9/15/16

Courtney M. Brown, R(S)
Vice President
Island Sotheby's International Realty

 

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