Hawaii Transient Occupancy Tax (Aulani owners and guests)

[dvc_john]

In the past, there have been threads about the Hawaii Transient Occupancy Tax, and estimates of how much it would be. Well, those estimates could be way wrong if the legislation proposed by Hawaii's new governor and working it's way thru the legislature is passed.

The old formula: 7.25% of 50% of annual maintenance fees.
The new formula: 9.25% of 150% of annual maintenance fees.

I presume those are based on weekly timeshares, and would be adjusted for daily point usage in DVC reservations. And, of course, the occupancy tax is separate from real estate taxes.

Below is an excerpt from an email sent to HGVC (Hilton timeshare) owners of Hawaii properties:

Dear Club Member,
Hilton Grand Vacations is compelled to advise you of a very important issue facing timeshare owners in the state of Hawaii.

Several bills have been introduced in the Hawaii State Legislature that would increase both the percentage rate and the formula used for determining the tax charged to timeshare owners. The current rate of 7.25% would increase to 9.25% and the base amount subject to tax would also increase from 50% of the gross daily maintenance fee to 150% of the gross daily maintenance fee.

Currently a timeshare owner with a $1,000 maintenance fee pays a tax of $36.20. Under the new proposal, the tax payment for the same owner will increase to $138.70; nearly four times as much.

Hilton Grand Vacations and American Resort Development Association (�ARDA�) strongly oppose this tax increase and are working closely together to help timeshare owners fight the proposed legislation. Now, we would like to get our Owners involved to help in the collective effort to defeat this bill.
etc...

 

[ChiSoxKeith]

Thanks for the update.

 

[sean-1966]

Hmmm, that's not good. I hope DVC is all over this.

 

[Disney Todd]

Wow. That would really be detrimental to owners and those who use other home resorts there from time to time. It's hard not to imagine that the highest degree of buyer's remorse will belong to Aulani owners once the reality of huge airfare necessary to get there settles in and coupled with the relatively large amount of pts required for a stay there (compared to WDW resorts).

 

[DenLo]

Thanks for the heads up. Do you happen to have the S. B. number for the law that it is going through the Hawaii legislature? Or has the new law passed? I couldn't find any laws myself except for the 2009 law, S.B. 1111 which increased the rate to 9.25% on one half of the annual dues effective July 1, 2010 through June 30, 2015.

ARDA was against this 2009 legislation too, I wish they had been more successful in preventing it's passage.

 

[wdrl]

EDITED to correct tax rate. Please see my subsequent post #17 for further clarification.

The Aulani Transient Accommodation Tax table previously released by DVC already reflects the 7.25% tax rate, but it presumes that the tax rate only applies to one-half of Aulani's annual maintenance fee of $4.31 per point.

 

[dvc_john]

Do you happen to have the S. B. number for the law that it is going through the Hawaii legislature?

HB 809 is for the increase from 7.25% to 9.25%.
HB 1163 is for the increase from 50% to 150%.

It looks like the rate was increased from 7.25% to 9.25% previously, but only for hotels. (That was vetoed by the then governor, but the veto was overidden.) HB 809 increases it for timeshares. (New governor will undoubtedly sign it if passed.)

 

[jmatias]

Unfortunately our State government is looking at a lot of new taxes and they seem to think its okay to tax our most important industry....tourism.... to the max.

Jen

 

[alldiz]

Unfortunately our State government is looking at a lot of new taxes and they seem to think its okay to tax our most important industry....tourism.... to the max.

Jen

Sounds pretty dumb to bite the hand that feeds.

How will this affect people booking at Aulani who own at other resorts.....Is this tax just for owners???
Thanks
Kerri

 

[dianeschlicht]

Sounds pretty dumb to bite the hand that feeds.

How will this affect people booking at Aulani who own at other resorts.....Is this tax just for owners???
Thanks
Kerri

Not 100% certain, but I think it is charged per stay, so it would effect those staying at the resort on a given trip. I'm confused as to how this works for point stays. Would it be the number of points needed for that stay and then be figured on the maintenance for that number of points?

 

[RobDoc]

Sounds pretty dumb to bite the hand that feeds.

How will this affect people booking at Aulani who own at other resorts.....Is this tax just for owners???
Thanks
Kerri

No, the tax is not for owners. It is a users fee and will be charged to whomever is using the accommodation.

 

[dianeschlicht]

Doc, how do you think they would do this for point stays?

 

[RobDoc]

Doc, how do you think they would do this for point stays?

It looks like they are basing it on the maintenance fees at Aulani - even if other DVC points were actually used. wdrl addresses this in his post above.

I suspect there will be a daily tax based on the number of points used for the villa, based somehow on the maintenance fees for that resort, but charged to the person staying in the room. Cash stays are easy, just a % applied to the rental rate, so on timeshare stays, they are using the annual feess paid by the owners of the resort - in this case Aulani members.

 

[OhioDVC]

Wow. That would really be detrimental to owners and those who use other home resorts there from time to time. It's hard not to imagine that the highest degree of buyer's remorse will belong to Aulani owners once the reality of huge airfare necessary to get there settles in and coupled with the relatively large amount of pts required for a stay there (compared to WDW resorts).

Hawaii is worth the trip and expense. I've been there 15 times and it is beautiful. Aulani has one of the most beautiful beaches I've seen (toured property in Sep 2010). The increase in room tax is unfortunate, but it is common to pay tax on hotel stays. As DVC members we have been spoiled at WDW not paying the room tax. Everyone else at WDW is paying room tax. If Hawaii is successful in raising revenue this way, Florida will certainly notice and it might not be too long before we pay it at WDW.

 

[DenLo]

HB 809 is for the increase from 7.25% to 9.25%.
HB 1163 is for the increase from 50% to 150%.

It looks like the rate was increased from 7.25% to 9.25% previously, but only for hotels. (That was vetoed by the then governor, but the veto was overidden.) HB 809 increases it for timeshares. (New governor will undoubtedly sign it if passed.)

Thanks for the bill information, I'll keep an eye on it. I'm afraid you are correct that it will probably pass.

Unfortunately our State government is looking at a lot of new taxes and they seem to think its okay to tax our most important industry....tourism.... to the max.

It's the economy, evidently they believe that your state is beautiful enough to attract guests even with a high tax that can't be written off as an ownership tax.

Jen

I would think that Hawaii is going the route of a Transient tax because tourist's can't vote.

Hawaii is worth the trip and expense. I've been there 15 times and it is beautiful. Aulani has one of the most beautiful beaches I've seen (toured property in Sep 2010). The increase in room tax is unfortunate, but it is common to pay tax on hotel stays. As DVC members we have been spoiled at WDW not paying the room tax. Everyone else at WDW is paying room tax. If Hawaii is successful in raising revenue this way, Florida will certainly notice and it might not be too long before we pay it at WDW.

I'm not sure if we are spoiled since every DVC member plunked down a fair amount of money for the privilege of staying at the resorts. The odd thing is that state taxes the owners with property (ownership) tax and then turns around and taxes them for staying where they own. Somehow that just doesn't seem right. I could see taxing non-owners for a stay.

I agree that Hawaii is absolutely beautiful, and if you are spending thousands of dollars for your vacation, what difference will a second of hundred will make? The problem is that not all of us will necessarily spend our vacation dollars in Hawaii. For more than half of the mainland U.S. it's closer to travel to Mexico or the Caribbean. And if people want to spend U.S. dollars and not worry about passports, there's Puerto Rico and the U.S. Virgin Islands. Personally for snorkeling I prefer the warmer waters in the Virgin Islands. But Hawaii offers many things that the Caribbean does not so I'm back where I started, it's an expensive tax but it will only chase away those on a very tight budget to start with.

 

[DenLo]

I just went in and checked the status of the HB 1163 (to increase the amount taxed from 50% of the annual dues to 150%) and on 01/31/11 the house committee recommends that the measure be deferred. http://www.capitol.hawaii.gov/session2011/lists/measure_indiv.aspx?billtype=HB&billnumber=1163

Am I being to hopeful that bill HB 1163 may not pass?

Regarding HB 809 the House committee has recommended on 02/07/11 that the measure be passed to raise the tax from 7.25% to 9.25% for the period of July 1, 2011 through June 30, 2015. So it definitely looks like the tax will be increasing.

 

[wdrl]

Not 100% certain, but I think it is charged per stay, so it would effect those staying at the resort on a given trip. I'm confused as to how this works for point stays. Would it be the number of points needed for that stay and then be figured on the maintenance for that number of points?

Here is a link to the Aulani Transient Accommodations Tax that was released by DVC: http://advc.disney.go.com/media/dvc...iiaccommodationtax/HawaiiAccommodationTax.pdf. My thanks to erionm for posting the link on another thread.

As stated on the chart, the Hawaii TAT is paid at or before checkout. It is paid by the person who actually occupies the villa.

I recomputed the tax amounts and confirmed that the Chart is using a tax rate of 7.25% and one-half of Aulani's current MF of $4.31 per point. It is not using the higher rate of 9.25% as I personally posted on other threads. My apologies for not catching my error sooner.

The State of Hawaii currently assesses a 9.25% Transient Accommodations Tax on "an apartment, house, condominium, beach house, hotel room or suite, or similar living accommodation furnished to a transient person for less than 180 consecutive days in exchange for payment in cash, goods, or services." However, a "time share vacation unit" is treated differently for tax purposes. Under current Hawaii tax regulations, a time share is taxed at the rate of 7.25%. The language in Hawaii Tax Form TA-1 (see http://www.state.hi.us/tax/2010/ta1ins.pdf) states:

The TSO tax is levied on the occupant of a time share vacation unit at the rate of 7.25% of the unit’s fair market rental value. The time share plan manager shall be liable for and pay to the State the TSO tax.

“Fair market rental value” is defined as an amount equal to one-half the gross daily maintenance fees that are paid by the owner, are attributable to the time share unit, and include maintenance costs, operational costs, insurance, repair costs, administrative costs, taxes, other than transient accommodations taxes, and other costs including payments required for reserves or sinking funds. The taxpayer shall use gross maintenance fees, unless the taxpayer proves or the Director of Taxation determines that the gross daily maintenance fees do not fairly represents fair market rental value taking into account comparable transient accommodation rentals or by other appraisal methods.
​

H.B. 809, which denlo points out is still pending before the Hawaii State Legislature, would tax time share vacation units at the same 9.25% rate as for other accommodations. If H.B. 809 is implemented and Aulani's Transient Accommodations Tax is increased from 7.25% to 9.25%, then the tax per point will increase by $0.0431 per point to $0.1993375 per point.

 

[dvc_john]

So, for a 2-br pool/garden view unit in Magic Season that costs 70 points/night, the occupancy tax would be:

$10.93/night under current regulations
$14.00/night if HB 809 (7.25% increase to 9.25%) passes, which is likely
$42.00/night if both HB 809 and HB 1163 pass

 

[dianeschlicht]

So, for a 2-br pool/garden view unit in Magic Season that costs 70 points/night, the occupancy tax would be:

$10.93/night under current regulations
$14.00/night if HB 809 (7.25% increase to 9.25%) passes, which is likely
$42.00/night if both HB 809 and HB 1163 pass

Holy cow!!! For $42 a night, it will be a HUGE additional part of any stay in Hawaii! Add onto that the parking costs, and it will not make sense to be using your timeshare! You might as well book a hotel, because you will be paying twice to stay in your timeshare.

 

[disneydenisel]

That is ridiculous ! So we own a Hawaii timeshare and have paid the Hawaii daily occupancy tax of about $10-14/night for our two bedroom villa each year. So this would mean with MFs of about $2400 a year for a week, we would have to pay $333 if both HB 809 and 1163 pass. Yikes!