- Agency
- The Honolulu Department of Planning and Permitting for city registration, and the Hawaii Department of Taxation for the transient accommodations tax license
- Form or filing
- A city registration and compliance statement for the unit, plus a transient accommodations tax license for the operator
- Timing
- Confirm before you list, since a buyer may need to register anew and the city's rules and court orders on the 90 day minimum have changed over time
Common snag: Selling a unit with a rental history that cannot be shown to be lawful. A buyer cannot count income that may not be allowed to continue.
This guide is general information and is not tax or legal advice. Confirm every step with your attorney, your CPA and the city and state offices involved.
Two Layers of Rules
Short term rentals on Oahu answer to the City and County of Honolulu, which sets where and how a unit can rent, and to the state, which taxes lodging through the transient accommodations tax. Both layers matter in a sale.
A unit that meets one set of rules and misses the other is a problem for a buyer.
City Registration
The city requires units to be registered and to show compliance, and it ties registration to a valid state tax license. Ask the Department of Planning and Permitting what your unit holds and whether the registration passes to a buyer or must be redone.
In some Hawaii counties, sources say registration lapses after a change in ownership. Do not assume Honolulu matches them. Ask.
The 90 Day Minimum and Grandfathering
Honolulu's ordinance sets a 90 day minimum stay for many rentals. A court order in 2023 limited how that rule can be enforced against certain 30 to 89 day rentals that were lawfully operating before October 23, 2022.
Whether a unit qualifies depends on its history, so have an attorney review it before you tell a buyer anything.
State Tax License
An operator needs a transient accommodations tax license and files returns on rental income.
A buyer will generally need its own account for a unit it buys, and a seller should close out its own filings. Confirm both steps with the Department of Taxation.
Steps for Sellers
- Gather registrations, tax licenses and returns for every unit.
- Have an attorney confirm each unit's status, including any grandfathering.
- Tell the buyer which units can continue renting and which cannot.
- Close or move accounts with the right agency on or after the closing date.
What Buyers Ask Sellers
Buyers ask for rental income by unit, tax filings, registration papers and any notices from the city. Keep them in one folder and make sure the numbers match the returns.
Income that cannot be shown does not count toward the price.
Common Mistakes
Sellers often quote rental income that included units no longer allowed to rent, or assume a registration moves with the sale. Either one can undo a price after the buyer's attorney looks.
Check first, then price the business on what can continue.
Where This Fits in the Sale
Management companies are priced on fee income. See how rental managers are valued and read the tax clearance guide. Then ask what your business is worth.