I have been receiving emails with various questions from my clients who are interested in buying a condo (or a house) on Maui, and I have personally been replying to each of them.
While replying to a recent client’s email, I thought it would be good for me to share some of the “questions and answers” here on Wailea Realty Maui Blog as I think it will be a valuable resource to all who are searching the internet for answers to their questions on purchasing a real estate property on Maui.
Here are some of them:
1. If we own a condo in Hawaii do we have to file a Hawaiian state tax return or would it only be on rental income?
A: If you own a property that you rent in Hawaii, you would need to file a tax return and pay taxes on income generated in the state of Hawaii. However, you would not be required to pay state income tax in your state of residence on the Hawaii income. You would be required to pay federal tax as well, or if it generates write offs, depreciation or losses those would also apply. But please consult your tax advisor to confirm how this will impact your personal situation.
2. Would we have to pay any hotel tax on the rental price?
A: For short term rentals (6 months or less) “yes” the state of Hawaii and County of Maui has a state sales tax (GET) of 4% plus Transient Accommodations (TAT) Tax of 9.25%. However, most renters would pay this tax on top of the rental rate.
For long term rentals (6 months or More) it would only be the GET of 4% that is paid and that can be paid by either the landlord or the tenant depending on how it is negotiated.
3. Do we need to file for a rental permit?
A: As long as it is in an approved rental condo, you would just need to apply for a tax license and number.
4. Are there any other fees?
A: Electric, telephone and if in a resort district like Wailea, possibly a small yearly fee of 300 to 600 dollars
5. What are the property taxes on Maui?
A: It depends on how you use the property. I can get you a copy of our current tax breakdown for Maui which changes every year, just email me and I will send it off to you; but roughly for a full time resident owner occupants it is a quarter of one percent, for long term rentals it hovers around a half of one percent, and for short term rentals it has been around nine tenths of one percent. So the good news it is really low and has always remained under 1% for all the time I have been here (15 years).
6. What are the average HOA fees and what do they typically cover?
A: Each complex is different but generally speaking the HOA fees are $300 to $900 on condos under a million dollars. What is covered is most everything involved with the overall property maintenance and upkeep, sometimes cable and internet and electric can also be covered. It is better to check on each property for exact details. And remember the old adage “you get what you pay for”…so the prettier the property and the better condition it is in the higher the fees tend too be.
The above are just samples of the many questions and answers on buying a real estate property on Maui. Please check out my YouTube channel for more Answers on Frequently asked Questions on buying Maui properties: