Owning a rental property on one of the most beautiful islands on the planet is something most people aspire to. You’ve probably seen many advertisements on good family home property deals tempting potential occupants with the promise of island life. Though offering rent in Maui may be a good business approach, it’s important to know the strings attached.

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Before taking the plunge as a real estate entrepreneur, you must arm yourself with the proper knowledge and processes to make an informed decision based on what best fits your needs. This write-up aims to discuss, in detail, the rules and regulations interested individuals may encounter while pursuing these ambitions. Note that the details below apply to family home vacation rentals, given that many condos in Maui are already allowed short-term rentals.

Only a handful of homes around the island qualify for a “hotel/resort” zoning. This means if a property does not have a hotel/resort zoning, a homeowner would go for either a short-term rental or a bed & breakfast permit.

Check out FAQs About Short Term Vacation Rentals (STRs) and Bed and Breakfasts (B&B) in Maui County.

What are Short-Term Rental Permits?

These permits apply to those who want to own a second home that they vacation rent. Maui County has policies to regulate vacation rentals of single-family homes and agriculturally zoned estates. The process to attain this permit is strenuous and requires a lot of documentation that will be formally reviewed and go through a public hearing with the Maui Planning Commission. Note that the County has the option to or not approve the application.

Some important things to consider when acquiring short-term rental permits:

 

  • You must meet the requirement of owning the home for five years before applying.
  • Short-term rental permits do not transfer upon the sale of the property. They would need to wait five years before being eligible to apply.
  • Cottages or ohanas, or accessory dwellings, may not be rented short-term.
  • There is a limit to the number of vacation rentals in a community, so check the county website for details. As of today, no area in Maui has reached the maximum capacity.

What are Bed and Breakfast Permits?

Similar to short-term rental permit applications, this process does not guarantee auto-approval. To attain this, the homeowner must live in the property as an occupant. All details can be found in the County’s official Ordinance No. 3611. Though you do not need to be a property owner for five years, you will still need to observe the following pointers:

  • There are caps on the number of beds and breakfasts a community can have.
  • The country ordinance prohibits the transfer of bed and breakfast permits upon a sale.
  • Bed and breakfasts in agriculturally zoned areas must require Maui Planning Commission approval.
  • B&B owners can only serve simple breakfasts since doing more would require a separate commercial kitchen license.

After everything, does it mean I can start listing my home as a vacation rental?

Though the County is the primary authority in regulating vacation rentals within a community, homeowners must also check with their homeowner’s association. Some resort communities in subdivisions such as Wailea and Kapalua prohibit vacation rentals. Make sure that they know your plans so you can see how viable it is to push through with it.

Other rules you’ll also have to keep in mind is that any owner renting their property on a short-term basis ( <6 months) must register & obtain a state tax ID, have an on-island representative, and include both license and permit information in all forms of advertising.

How about taxes?

There are two state taxes on any rental income generated from either bed & breakfasts or vacation rentals. Get to know your property’s tax based on its assessed value:

  • Bed and Breakfast Rate – Commercial residential (plus no exemption) – $4.55 / $1,000 of assessed value
  • Short Term Rental Homes – Commercial – $7.28 / $1,000 of assessed value. 
  • Vacation Rental Condominiums – Hotel Resort –  $9.28 / $1,000 of assessed value

Rates are reviewed on an annual basis and may be subject to change. Regularly check the Maui County website for any adjustments.

Should I go for it?

All things considered, it all depends on how you want to go about it. Ask yourself what are your plans in 5, 10, 20 years? Do you see yourself permanently staying in Maui or do you want to utilize your property and make it income-generating? Both short-term rental and bed & breakfast permit acquisition is a lengthy processes. For further assistance or information, contact us at 808-217-8832 or via our contact form to see how we can help!