Maui Real Estate Issues Addressed by Officials

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February 13, 2015

If you’re in the market for Maui real estate, the first thing you’re probably wondering about this post is: what are the issues? The ones recently addressed by Mayor Alan Arakawa and the County Council involve short-term vacation rentals.

The mayor and the council signed three bills into law in order to regulate and legitimize pre-existing activity here on the island with regard to vacation rental uses.

The first law is Ordinance 4167, which confirms short-term rental use in apartment zoning areas. In the past, owners have been concerned that the county would revoke their ability to use their apartment-zoned properties as short-term rentals. This issue came up as early as 1989, when the county prevented short-term rentals in apartment zoned areas. The choice was made because rental prices were being driven up as long-term rentals were converted to short-term rentals.

The second law is Ordinance 4165, which created a requirement for properties with a transient vacation rental permit to use the tax classification of “commercial” residential, with a tax rate that will be set accordingly. For the first time, owners can make plans based on specific property tax rates for this kind of rental.

Lastly, Ordinance 4166 applies to planned unit developments that intend to allow short-term rentals. These developments are now required to include an annual report for the director of finance, verifying the number of units in the project that will be used as short-term rentals. If no report is filed, all units will be taxed at the higher short-term rental rate, which incentivises accuracy.

We hope you’ve found this breakdown informative, especially if you’re planning to buy Maui real estate for short-term rental use. Many consider these changes to be helpful in developing a more business-friendly environment for the island, and there are more incoming changes. A workforce housing bill is being amended now, and it will be more favorable to developers while also helping Maui meet its 50 percent affordable housing requirement.

Mahalo for reading this week, and have a wonderful weekend!



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