Everybody Is Talking About Bill 147. Not Many Are Talking About Your Taxes.

Aloha!

Everybody is talking about Bill 147 these days, but not so much about the homeowners who run a hosted vacation rental.

Generally, the shorter the stay, the more flexibly you can rent. As it stands, the plan is for the definition of short-term to change from less than 30 days to less than 180 days. Yes, that means even a five-month stay would count as short-term.

If you run a hosted vacation rental (which would be called a B&B once Bill 147 takes effect), you could end up paying not only the registration fee but also a higher property tax. That higher tax is not about your rental income. It is about your property losing its homeowner status, and with it the lower rate and the 3 percent cap.

I called the County Planning Department and the Real Property Tax Office to get this straight, because the short-term rental rules confuse almost everyone. Here is what they said.

What the Tax Office told me

If any part of your home is rented for less than 180 days, that counts as short-term, and you do not get the homeowner tax rate or the 3 percent assessment cap. Depending on your age you may still keep some reduction in your assessed value, but the property is taxed at the higher, non-homeowner rate.

Here is what that 180-day line means in practice. Whether a stay is two months or five months, as long as it is under 180 days, it counts as short-term. So on the income side, the transient tax (TAT) applies, on top of the GET you may already be paying. And on the property side, an owner running a short-term rental, even in their own primary residence, loses the homeowner benefits they would otherwise have: the lower tax rate and the 3 percent cap on assessed value. (What Bill 147 would change is the zoning definition, moving it from under 30 days to under 180 days to match this same mark.)

As things stand today, the office was candid: depending on your numbers, you may be better off not doing a short-term rental at all. (More on why I say "as things stand today" in a moment.)

What the Planning Department told me

Zoning is a different question entirely. It does not care how much tax you pay. It cares whether a short-term rental is even allowed where your property sits. Today, zoning's short-term line is still under 30 days, from the 2018 rules (Bill 108). The change to under 180 days lives in Bill 147.

Bill 147 is a bill, not a law (a bill is a proposal that has not passed, which is why it does not have an official ordinance number yet). On June 30 the Leeward Planning Commission studied it for about four hours and then deferred it to a July 16 hearing. So when someone tells you it lands on a certain date, the honest answer is "supposedly," and I would keep the pencil handy, not the pen.

Registration

Bill 47 (Ordinance 25-50) requires registration for hosted and unhosted rentals under 180 days. The start moved from December 2025 to July 1, 2026, then to September 1, 2026. Fees are $250 for hosted and $500 for unhosted.

One more thing, worth watching

This is why I keep saying "as things stand today." A County Council member is working on measures, expected to be introduced around July 22, that would give owners a grace period to register (through the end of the year) and create a new B&B tax class that could let hosted homeowners keep the 3 percent cap at a lower rate. That would soften a good deal of what I described above.

That said, these are still early-stage proposals, not law. Because some of this is not yet settled, whether a short-term rental turns out to be worth it, even if it means losing some or all of the homeowner benefits, will depend on how things develop from here.

None of this is tax or legal advice, and I am not a CPA. For now, I would watch how this develops, and talk it through with a tax professional.

Mahalo,

Akemi