Who needs a Hawaii General Excise Tax (GET) License?
How to get a Hawaii General Excise Tax (GET) License:
What is the transient accommodations tax (TAT)?
The TAT is a tax imposed on the gross rental proceeds from a transient accommodation, on the fair market rental value of a time share vacation unit in the State of Hawaii and (beginning with tax year 2019) on the gross receipts of transient accommodations brokers, travel agents and tour packagers from arranging to furnish transient accommodations at noncommissioned negotiated contract rates.
What is included in gross rental proceeds?
Your gross rental proceeds are the amounts you receive in cash, goods, or services for renting a transient accommodation, or for entering into arrangements to furnish transient accommodations when such arrangements are made at noncommissioned negotiated contract rates, without any deductions for costs. For example, you may not deduct interest paid on a mortgage, labor costs, the cost of supplies, or costs incurred to provide services to guests or tenants.
Gross rental proceeds do not include charges for guest amenities such as meals, telephone calls, and laundry services. However, gross rental proceeds do include fees, such as maintenance fees, cleaning fees and management fees, that are not usually charged separately to guests or tenants. Gross rental proceeds also include any mandatory resort fees charged for use of the transient accommodation’s property, services, or amenities.
Gross rental proceeds do not include the general excise tax (GET) (including a county surcharge if applicable) or the TAT that is visibly passed on to the guest or tenant.
What is the TAT rate that I must pay on my gross rental proceeds?
The TAT rate on your gross rental proceeds is 10.25%.
I am already paying the GET at 4% (plus a county surcharge if applicable). Do I have to pay both GET and TAT?
Yes. You are required to be registered for, and to pay both GET and TAT.
Does it make a difference if the GET and the TAT are shown separately on the bill?
Yes. The GET (including a county surcharge if applicable) and the TAT that are visibly passed on to the guest or tenant are excluded from gross rental proceeds subject to the TAT.
The TAT that is visibly passed on to the guest or tenant is exempt from the GET. However, the GET that is visibly passed on is included in taxable income subject to the GET.
If you charge your guest or tenant a flat fee without separately stating the GET and the TAT, you are required to pay GET (including a county surcharge if applicable) and TAT on the entire amount.
How do I visibly pass on the GET and TAT?
You should inform your guests or tenants if you will pass on the GET and the TAT whenever the price is quoted. When you prepare the bill, the GET and the TAT must be separately stated and identified.
If you would like more info about TAT and how to calculate it, check out the State guide here.
Can I help you?
If you are considering purchasing a second home on Hawaii Island or thinking of selling your investment property, my team and I have the experience to help you AND provide excellent service!
Contact me, Julie Ziemelis at Julie@Ziemelis.com or text/call 808-785-2898.
Julie Ziemelis is a Realtor with KW Big Island in Kona. Julie is the author of “How to Move to Kona”, “The Insiders Guide to Buying Real Estate on the Big Island” and a memoir about her first years here and insights for others “1 Year, 2 Kids, 800 Sq Feet-Adventures of a Small Family on the Big Island”