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Lanikai, Kailua, Waimanalo

San Antonio, Texas
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Lanikai, Kailua, Waimanalo

I had no idea the illegal rentals, B&B's was a problem. My family wanted to stay in a beach house (4 people) in one of these areas, but now I'm not so sure what to do. My husband is a local boy born and raised in Kailua, and he never heard about this. Guess we'll need to talk to his parents and relatives who live there. How do we know who has an illegal business ?

Mahalo for your time

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1. Re: Lanikai, Kailua, Waimanalo

We rented for a week in Waimanalo through Beach House Hawaii and had no problems. Lovely 2BR1BA cottage, and the owners lived right behind and were really friendly and helpful. Just a block from the beach, and on the beach side of the main road.

I have heard about that illegal-rental problem in Kailua; also many areas of Kailua will only allow 30-day or longer rentals. VRBO is generally a pretty reliable source. Good luck!

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2. Re: Lanikai, Kailua, Waimanalo

do you have a link to where I can do more reading on this? why is it illegal?

Boston...
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3. Re: Lanikai, Kailua, Waimanalo

If you do a search under Kailua illegal B&Bs, I think you will find some information. Summarily, towns and state businesses were upset and the major underlying current was tax money.

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Kailua-Kona
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4. Re: Lanikai, Kailua, Waimanalo

Vacation (transient) lodging is only permitted in resort-zoned areas on Oahu....

Places like Waikiki, Ko Olina and Turtle Bay.

Permits allowing transient rentals were only granted until 1989-90. None since. Any operation starting up in the past two decades is "illegal".

But demand increased far beyond the relatively few homes which have "certificates" making them legal, resulting in there being hundreds of illegal rental operations throughout the island.

Many residents do not like what they feel is a disruption in their community and the degradation of their neighborhood spirit, and want the illegal units closed down. Others say they have driven the price of housing up because investors see the highly profitable potentials in vacation rentals.

It was a hugely controversial issue several years ago, overwhelming almost every public board or council hearing, but the CIty threatened to crack down and then the recession struck a major blow. As a result many of those rental operations have closed down, been foreclosed on, or gone underground.

It is estimated there are about 500 to 600 "illegal" rentals left on Oahu; about half the number of mid-decade. WIth the decline, the issue is not as "hot" as is once was.

As a renter of an "illegal" unit, it is highly unlikely you would notice any difference from a legal one. The police are not going to come and hassle you.

However, the owners could be fined, and because of the instability of the sector there have been closings, foreclosures and other actions which have resulted in a few visitors losing their money.

We appreciate visitors who abide by our laws and avoid supporting these "illegal" operations...although it's not like they are brothels or crack houses.

If an owner has a certificate they absolutely make a point of noting such on all their materials. If a home is newer than 1990, or the website/owner does mention their having a certificate, you can be sure they don't.

A list of permitted vacation rentals outside the resort areas on Oahu can be found at:

honoluludpp.org/HotIssues/NUCreport.pdf

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5. Re: Lanikai, Kailua, Waimanalo

so when they "charge" for "tax" - they are just saying that to make it sound more official?

thanks for the thorough explanation. love tripadvisor people!

Frisco, Texas
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6. Re: Lanikai, Kailua, Waimanalo

"so when they "charge" for "tax" - they are just saying that to make it sound more official?"

Maybe. If they are actually treating it as a business, they will owe both state and federal taxes on their net income. However, charging you a set percentage and referring to it as a particular type of tax is pretty bogus if they don't have a certificate.

I grew up in Kailua and stay there a couple of times per year and am guilty of staying in an "illegal" rental about 50% of the time. I just tell them to take off the tax charge unless they can show me the certificate. A large group of legal rentals can be found at Pat's Kailua Rentals, which is where I often stay.

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Kailua-Kona
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7. Re: Lanikai, Kailua, Waimanalo

The Transient Accommodation Tax (TAT) and General Excise Tax (GET) that are to be collected on every vacation rental, everwhere in the islands, are paid to the State of Hawaii.

I think the large majority of "illegal" rentals collect and pay the taxes as they are supposed to. The State monitors compliance fairly closely and keeps tabs on the operations. Most owners don't want a tax beef that can land them in prison.

Land use laws which declare certain rentals "illegal" are administered by the individual counties; each of which has different rules. The most that can happen to a rental without a certificate is a fine; and very, very few of those have ever been assessed.

The State does not share its tax data on rentals (which would make it easy to identify illegal operations) with the counties, which infuriates them; because it would show clear evidence of "guilt" without them having to do exhaustive and expensive investigations.

The State doesn't give a rats a$$ about the County land use laws and their enforcement, they just want the tax dollars to keep flowing in.

Edited: 03 June 2011, 01:05
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8. Re: Lanikai, Kailua, Waimanalo

<<The State does not share its tax data on rentals (which would make it easy to identify illegal operations) with the counties, which infuriates them; because it would show clear evidence of "guilt" without them having to do exhaustive and expensive investigations.>>

Amberloo -- Could the counties impose their own tax - albeit a small one - to flush out the miscreants?? If you ever want to take a look at Cailfornia's TOT data, let me know. (You may already have it...)

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9. Re: Lanikai, Kailua, Waimanalo

Betty Lou....

In Hawaii, the Counties are super-restricted by State law on exactly what types of taxes and fees they may impose. They are mere vassals when it comes to raising revenues.

It is unlikely they would get approval for anything that would be construed as potentially competing with the State revenue stream. And, the State collects all taxes apart from Real Property Taxes, then takes a hefty cut before disbursing the funds to the Counties (as for the TAT and for the additional GET on Oahu); mitigating the incentive a County my have to levy a new tax, even if allowed.

If they did, it would be perplexing to be an operator of an illegal rental. Do you pay your taxes so as not go to jail, but end up getting busted for an illegal rental? Or not pay your taxes so the County cannot close you down, but maybe suffer a tax beef?

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10. Re: Lanikai, Kailua, Waimanalo

<<If they did, it would be perplexing to be an operator of an illegal rental. Do you pay your taxes so as not go to jail, but end up getting busted for an illegal rental? Or not pay your taxes so the County cannot close you down, but maybe suffer a tax beef?>> Exactly! Sounds good to me! Smoke out the baddies.

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