Renting Residential Real Property

Overview

If you receive income from renting out a portion or the entirety of your house, condominium, apartment, second home, vacation home, investment property, or other dwelling unit located in Hawaiʻi, you are engaging in a taxable business activity.

Proceeds from the rental of Hawaiʻi real property are subject to Hawaiʻi income tax and the general excise tax (GET), and if the property is a transient accommodation, it is also subject to the transient accommodations tax (TAT).

Operators of long-term rental properties (rentals of 180 consecutive days or more) must:

  • Report rental income on your Hawaiʻi individual income tax return;
  • Register for a GET license;
  • File periodic (Form G-45) and annual/reconciliation (Form G-49) GET returns; and
  • Pay GET on all gross receipts unless an exemption applies.

Operators of short-term rental properties, also known as transient accommodations (rentals of less than 180 consecutive days), must:

  • Report rental income on your Hawaiʻi individual income tax return;
  • Register for a GET and TAT license;
  • File periodic (Form G-45) and annual/reconciliation (Form G-49) GET returns;
  • File periodic (Form TA-1) and annual/reconciliation (Form TA-2) TAT returns; and
  • Pay GET on all gross receipts and pay TAT on all gross rental proceeds unless an exemption applies.

You may register, file, and pay GET and TAT online through Hawaiʻi Tax Online at hitax.hawaii.gov.

Income Tax

Rental income must be reported on your Hawaiʻi individual income tax return (Form N-11 for residents or Form N-15 for part-year/ nonresidents). You are required to report gross rental income, even if you also file GET and TAT returns.

For more details:

General Excise Tax (GET)

The General Excise Tax (GET) is a tax on business activity in Hawaiʻi, including the renting of real property. The tax is imposed on the gross income received by the person engaging in the business activity.

Your gross income is the total of all your business income before you deduct any business expenses. Gross income includes all amounts received from your rental activity before deducting any expenses. This also includes any amounts passed on to the tenant, such as the GET itself, if you choose to visibly pass it on.

For more details:

Transient Accommodations Tax (TAT)

The Transient Accommodations Tax (TAT) is a tax imposed on short-term rental (rentals of less than 180 consecutive days) activity in Hawaiʻi. It is imposed on gross rental proceeds from renting transient accommodations in Hawaiʻi. Long-term rentals are not subject to the TAT, but short-term rentals are subject to both GET and TAT.

For more details:

County-Level TAT:

Each county in the State of Hawaiʻi imposes its own County TAT, which is paid directly to the county. Counties also have their own short-term rental rules, including zoning, permits, and operational requirements. Be sure to check with your local county office for current tax and compliance guidelines.

Third-Party Rent Collectors

The use of a third-party rent collector or managing agent does not relieve the property owner of their tax obligations. Property owners remain responsible for ensuring all applicable taxes are reported and paid.

Additionally, third-party rent collectors are required to file disclosures with the Hawaiʻi Department of Taxation. This includes submitting Form RCA-1 to report on whose behalf rent is being collected.

For more details:

Penalties for Noncompliance

  • Failure to register for a GET license before engaging in business in the State:
    • A fine of $2,000 for a cash-based business; and
    • A fine of $500 for all others.
  • Failure to file a tax return:
    • 5% of the unpaid tax per month, up to 25%.
  • Failure to pay tax within 60 days of timely filing:
    • 20% of the unpaid tax.
  • Fraudulent failure to pay tax:
    • Up to 50% of the unpaid tax.
  • Interest on unpaid or underpaid tax:
    • Accrues at two-thirds of 1% per month.
  • Failure to display TAT license number on any advertisement, including an online advertisement: A monetary fine of no less than:
    • $500 per day for a first violation;
    • $1,000 per day for a second violation; and
    • $5,000 per day for a third and any subsequent violation.

Frequently Asked Questions

  1. I already reported my rental income on my income taxes. Do I have to file and pay other taxes?
    Yes. In addition to reporting rental income on your Hawaiʻi income tax return, you are also required to file and pay:

    • GET: This applies to all rental income received from property located in Hawaiʻi, regardless of the rental duration.
    • TAT: If you rent the property for periods of less than 180 consecutive days (e.g., short-term or vacation rentals), you may also be subject to the TAT.
  2. Am I responsible for GET and/or TAT on my rental property if my property manager collects rent and files and pays the taxes on my behalf?
    Yes. As the property owner, you are ultimately responsible for ensuring that all GET and, if applicable, TAT obligations are properly filed and paid. Even if your property manager handles tax filings and payments on your behalf, you remain legally accountable for compliance with Hawaiʻi tax laws.
  3. What happens if my property manager doesn’t file taxes properly?
    As the property owner, you are ultimately responsible for filing and paying taxes on your rental income. If there are any unpaid taxes related to your rental activity, you may be held liable for the taxes owed, as well as any associated penalties and interest.

    If you have an agreement with your property manager to file and pay taxes on your behalf, it’s important to regularly monitor their filings and request copies of submitted tax forms and payment confirmations to ensure compliance.

    Please note that your property manager is responsible for filing and paying taxes on the income they earn from providing property management services.

  4. I have been renting out my property for several years, but I haven’t been filing or paying the GET. How far back should I go to file and pay the GET?
    If you have not filed GET (and, if applicable, TAT) returns, there is no statute of limitations for non-filers. This means the State of Hawaiʻi can assess taxes for all prior years in which you earned rental income but did not file.

    While you are expected to file for all outstanding years, the Department of Taxation generally recommends that non-filers submit at least 10 years of back returns if rental activity has been ongoing for that long.

  5. How do I register for a GET or TAT license?
    You may register for a GET or TAT license by completing Form BB-1, State of Hawaiʻi Basic Business Application. There are several ways to submit your application:

    • Online: Visit Hawaiʻi Tax Online and select “Register New Business.”
    • By Mail or In Person: Download Form BB-1 from tax.hawaii.gov, or pick one up at any district tax office. Submit the completed form along with the registration fee.
  6. How do I file a GET or TAT return?
    You can file your GET and TAT returns in one of the following ways:

    • Online: The fastest and most secure method is through Hawaiʻi Tax Online. You can file returns, make payments, and manage your tax accounts all in one place
    • By Paper: If you prefer to file by mail, you can download the appropriate forms from tax.hawaii.gov and send them to the mailing address listed on each form.

    Important Notes:

    • If your annual GET or TAT liability exceeds $4,000, you are required to file monthly returns electronically.
    • Taxpayers who are required to file electronically but fail to do so may be subject to a 2% penalty on the tax due.
  7. Why did I receive the Rental Property Compliance notice?

    Our records indicate that you may be receiving rental income from a residential property located in Hawaiʻi. This could include renting out all or part of a house, condominium, apartment, second home, vacation home, or other investment property. The notice is intended to ensure compliance with applicable Hawaiʻi taxes and rules on rental income from property located in Hawaiʻi.

  8. What information prompted the issuance of the Rental Property Compliance Notice?
    Under Hawaiʻi law, individuals or companies authorized to collect rent on behalf of property owners—such as property managers, booking platforms, or rental agents—are required to report rental activity to the Department of Taxation. These reports are submitted under Sections 237-30.5 and 237D-8.5, Hawaiʻi Revised Statutes, using Form RCA-1.

    For more details, visit the Rental Collection Agreement (RCA) page on the Department’s website.

  9. May I still respond to the Rental Property Compliance notice even if the deadline to respond has passed?
    Yes. If you missed the response deadline stated in the Rental Property Compliance notice, you should still reply to the notice as soon as possible using the methods provided in the notice.
  10. I owned a rental property and reported my rental income under my business name. What should I do?
    If you received a Rental Property Compliance notice but reported your rental income under a business entity, you must respond to the notice either through Hawaiʻi Tax Online or by mail. Please include the following information in your response:

    • GET and/or TAT license number(s) used to report the rental income.
    • The name of the business entity associated with the license number(s).

    Providing this information helps the Department of Taxation verify that your rental income has been properly reported under the correct account.

  11. What if I believe the Rental Property Compliance notice was sent in error?
    If you believe the Rental Property Compliance notice was sent to you in error, you should submit the Declaration Form with an explanation using one of the following methods:

    • Online: Visit Hawaiʻi Tax Online
      Under “Correspondence” use the “Reply to Rental Property Compliance Notice”. Enter Letter ID, and One-time password included in the notice.
    • By Mail. Complete the Declaration Form with an explanation to:

      Department of Taxation
      Attn: Compliance Verification – RCA
      P.O. Box 259
      Honolulu, HI 96809-0259