Owning a Long-Term Rental Property on Maui

A Long-Term Rental in Maui County is defined as any rental for a period of 180 days (6 months) or longer.

 

An owner will need to apply for a GET tax ID license number and pay the general excise tax on long-term rental income. Effective January 2024, the total State and Maui County General Excise Tax Rate is 4.712. GET can be passed along to the tenant in the monthly rent or absorbed in the overall rental rate.

 

There is a Long-Term Rental Property Tax Exemption and lower tax rate available for owners of Maui properties if the property is being used as a long-term rental for a rental period of 1 year or longer. It is up to the owner to apply for the exemption by December 31 and include a copy of a signed lease agreement. If the rental agreement expires, property owners need to re-apply. Refer to Maui County’s site for more information. Information on Maui County’s long-term rental property tax exemption. 

 

Here is an illustration of how the long-term rental tax exemption could result in property tax savings (based on 2022 tax rates):

 

Scenario 1: You purchase a condominium with a tax-assessed value of $800,000 in a residential community and you decide to rent it for a year to one tenant.

 

Non-owner-occupied tax rate is $5.85 per $1000 of assessed value

800 * 5.85 = $4,680 in annual property tax

 

With the long-term rental tax exemption, the assessed value is first reduced by $200,000

$800,000 - $200,000 = $600,000 adjusted assessed value

 

The long-term rental tax rate is $3.00 per $1000 of assessed value

600 * 3.0 = $1,800 in annual property tax

 

Scenario 2: You purchase a condominium with a tax-assessed value in a resort community that allows short-term vacation rentals and you decide to rent it for a year to one tenant.

 

The short-term rental tax rate is $11.85 per $1000 of assessed value

800 * 11.85 = $9,480 in annual property tax rate

 

With the Long-term rental tax exemption, the assessed value is first reduced by $200,000

$800,000 - $200,000 = $600,000 in adjusted assessed value

 

The long-term rental tax rate is $3.00 per $1000 of assessed value

600 * 3.0 = $1,800 in annual property tax

 

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