New Timeshare Taxes on Hawaii’s Big Island

Thanks to Honolulu city and county officials, timeshare owners on Hawaii could experience as much as a 50% increase in yearly costs.

Hawaii has long been considered the Holy Grail of vacation destinations. With everything that these islands offer, it’s no surprise. However, some recent changes to the Big Island’s tax laws are leaving a bad taste in the mouth of many timeshare owners.

Following last year’s decision by Maui to create a new category of taxable property called “timeshare”, the Big Island’s local government recently announced its decision to follow in Maui’s footsteps by unveiling a new tax on timeshare property. This new tax, known as the TAT, for Transient Accomodations Tax, is assessed based on the “fair market value” of a timeshare property. Strangely, “fair market value” is determined in this case NOT by the price a timeshare property could fairly command on the market, but rather by “an amount equal to one-half the gross daily maintenance fees that are paid by the owner.” However, if the timeshare is rented out on a nightly basis by the owner, the tax on the timeshare is assessed based on the value of the gross income of the rental unit. Timeshare units, categorized as such, are taxed differently than hotel property. But what happens to a hotel that offers some of its units on a time-sharing basis?

Reportedly, local lawmakers have earmarked a share of the revenue produced by this tax for the purpose of marketing Hawaii as a vacation destination. Granted, much of this tax goes toward the upkeep of public facilities used by timeshare owners, but one is forced to wonder why a timeshare owner ought to pay for marketing and promotions when he/she already owns at least one timeshare in Hawaii.

These new laws are raising some eyebrows in the timeshare-owning community. Many people feel that Honolulu city and county legislators ought to reconsider some of the ramifications of this new legislation.

If you own timeshare in Hawaii, you are strongly encouraged to contact your home resort or the appropriate local government agency for more information about these changes, and how they will affect you or your timeshare.

(More information on this subject and other news from Hawaii’s Big Island can be found at the Hawaii Reporter. Here is a link to their article.