A Landlord’s Guide to Hawaii’s GET, TAT, and Rental Tax Obligations
Here’s a truth that catches many new Oahu landlords off guard: Hawaii doesn’t have a traditional sales tax. What it does have is a web of tax obligations that apply to every dollar of rental income you collect — and the penalties for getting it wrong can erase months of rental profit in a single notice from the Department of Taxation.
Whether you’ve just purchased your first investment condo in Kakaako or you’ve been renting a single-family home in Mililani for years, understanding Hawaii’s rental property taxes isn’t just good practice — it’s essential to protecting your bottom line. At Agency Rentals, managing over 1,500 residential units across Oahu, we’ve helped hundreds of landlords navigate the state’s unique tax landscape. This guide breaks down every tax obligation you face as an Oahu rental property owner, from the General Excise Tax to federal deductions, with practical examples and the filing details you need to stay compliant in 2025.
The Three Taxes Every Oahu Landlord Must Understand
Before we dive into the details, here’s the big picture. As an Oahu rental property owner, you’re potentially subject to three distinct categories of tax on your rental income:
- General Excise Tax (GET) — applies to all rental income, whether long-term or short-term
- Transient Accommodations Tax (TAT) and Oahu TAT (OTAT) — applies only to short-term rentals (stays under 180 consecutive days)
- Income Tax — both Hawaii state income tax and federal income tax on your rental profits
Each of these taxes has its own rates, filing requirements, deadlines, and quirks. Let’s unpack them one at a time.
General Excise Tax (GET): The Tax That Applies to Everything
The GET is Hawaii’s signature tax, and it’s the one that surprises mainland investors the most. Unlike a sales tax that’s charged to the buyer, the GET is technically imposed on the business (that’s you, the landlord) for the privilege of doing business in Hawaii. It applies to your gross rental income — not your net profit — which means you owe GET even if your property is operating at a loss after expenses.
Current GET Rates for Oahu Landlords
For rental properties on Oahu, the effective GET rate is 4.5%, which breaks down as:
- 4.0% state GET rate
- 0.5% Oahu county surcharge
This rate applies to all gross rental receipts, including rent, any amounts tenants pay for utilities that are billed in your name, and maintenance fee reimbursements if your lease requires the tenant to cover those costs.
Passing GET to Your Tenants
Here’s where it gets interesting — and where many landlords make costly mistakes. Hawaii law allows you to “visibly pass on” the GET to your tenants. This means you can charge your tenant an additional amount on top of rent to cover your GET obligation. However, there are specific rules:
- The pass-on amount and rate must be clearly stated in your lease agreement
- On Oahu, the maximum pass-on rate is 4.712% (not 4.5%)
- The reason for this odd number: when you collect GET from your tenant, that collected amount itself becomes taxable income subject to GET. Charging 4.712% covers the “tax on the tax”
Practical Example: You rent a condo in Ala Moana for $2,500/month. If you visibly pass on the GET at 4.712%, you’d charge your tenant an additional $117.80, collecting $2,617.80 total. Your GET liability on the full $2,617.80 would be approximately $117.80 at 4.5% — the pass-on essentially makes you whole.
If you do not visibly pass on the GET (meaning you just charge a flat rent with no separate GET line item), you must pay the full 4.5% out of your rental income. On that same $2,500 rent, that’s $112.50 per month — or $1,350 per year — coming directly out of your returns.
The $2,000 Low-Income Exemption
There is one small break: the first $2,000 of rental income per year is exempt from GET, with the remaining amount taxed at the reduced rate of 0.5%. However, this exemption only applies if you’re renting to low-income tenants receiving government rental subsidies. For the vast majority of Oahu landlords charging market-rate rents, the standard 4.5% rate applies to all gross receipts.
GET Registration and Filing
Before collecting any rental income in Hawaii, you must register for a GET license:
- Register through Hawaii Tax Online (hitax.hawaii.gov) or submit Form BB-1 (Hawaii Basic Business Application)
- Pay the one-time $20 registration fee
- Receive your Hawaii Tax Identification Number (GE-xxx-xxx-xxxx-xx)
- Provide your GET license number to your tenants — this is required by Hawaii law so tenants can claim the low-income renter’s tax credit if eligible
Your filing frequency depends on your annual GET liability:
| Annual GET Liability | Filing Frequency | Due Date |
|---|---|---|
| $4,000+ | Monthly | 20th of following month |
| $2,000–$4,000 | Quarterly | 20th of month after quarter ends |
| Under $2,000 | Semi-annually | 20th of month after period ends |
You’ll file Form G-45 for each period and Form G-49 as an annual reconciliation. Even if you have zero income for a period (say, the property was vacant), you must still file the return showing zero — failing to file triggers automatic penalties.
GET Penalties: What’s at Stake
The consequences of non-compliance are steep:
- Late filing penalty: 5% per month, up to 25% of the tax owed
- Late payment interest: Approximately 8% annually
- Willful neglect penalty: Up to an additional 25%
- No statute of limitations: Unlike federal taxes, Hawaii’s GET has no statute of limitations for unfiled returns. The state can audit you going back as far as they want if returns were never filed
And here’s something many landlords don’t realize: even if your tenant reports to the state that they’re paying rent to you (renters can claim a $50 tax credit by reporting landlord information), the Department of Taxation has a built-in mechanism to cross-reference whether you’re reporting that income. In other words, there’s no hiding from GET.
Transient Accommodations Tax (TAT): Short-Term Rental Owners, Pay Attention
If you’re operating a permitted short-term rental on Oahu — meaning stays of less than 180 consecutive days — your tax obligations extend well beyond GET. You’ll also owe the state TAT and the Oahu county TAT (OTAT).
Current TAT and OTAT Rates (2025)
| Tax | Rate | Applies To |
|---|---|---|
| State TAT | 10.25% | Gross rental proceeds from stays under 180 days |
| Oahu TAT (OTAT) | 3.0% | Same gross rental proceeds, paid to City & County |
| Combined TAT/OTAT | 13.25% | Total transient accommodation tax on Oahu |
Add in the 4.5% GET, and short-term rental operators on Oahu face a combined tax burden of approximately 17.75% on gross rental proceeds. That’s a significant chunk of revenue that must be factored into your pricing and profitability analysis.
Important 2026 Update: The state legislature has passed a measure increasing the state TAT from 10.25% to 11.0% effective January 1, 2026. If you’re operating a short-term rental, plan now for this increase in your 2026 budget projections.
What Counts as “Gross Rental Proceeds” for TAT?
This is broader than many operators expect. Gross rental proceeds include:
- All base rental income
- Cleaning fees charged to guests
- Any other fees or charges for the accommodation
- GET and TAT amounts, if you do not collect them separately as visible pass-on items
That last point is critical. If you “visibly pass on” the GET and TAT as separate line items on your guest invoices, those passed-on amounts are excluded from the gross rental proceeds used to calculate TAT. If you bundle everything into a flat nightly rate, you pay TAT on the entire amount — including the tax component. Structuring your billing to visibly separate these taxes can result in meaningful savings.
TAT Registration and Filing
Short-term rental operators must obtain a separate TAT license in addition to their GET license:
- Registration fee: $5 for 1–5 units, $15 for 6+ units
- Filing: Form TA-1, filed on the same schedule as your GET returns
- OTAT: Paid separately to the City & County of Honolulu through their online portal at otatpay.honolulu.gov
- Display requirement: You must display your TAT registration certificate (or a notice indicating where it can be inspected) in each accommodation unit
Long-Term Landlords: You’re Off the Hook (Mostly)
If you’re exclusively renting long-term — leases of 180 consecutive days or more — you do not owe TAT or OTAT. Your only recurring tax obligation is GET on gross rental receipts (plus income taxes). This is one of the significant financial advantages of the long-term rental strategy on Oahu, and it’s a factor we frequently discuss with property owners at Agency Rentals when evaluating whether short-term or long-term leasing makes more sense for their specific property.
Hawaii Income Tax: The Third Layer
Beyond GET and TAT, your rental income is subject to both Hawaii state income tax and federal income tax. Here’s how they work together.
Hawaii State Income Tax on Rental Income
Hawaii’s income tax rates for 2025 range from 1.4% to 11%, depending on your total taxable income. Rental income is reported on your Hawaii individual income tax return — Form N-11 for residents or Form N-15 for part-year/non-residents.
Unlike GET (which is based on gross receipts), income tax is assessed on your net rental income after deductions. This means every legitimate expense you can document directly reduces your state income tax liability.
Special Considerations for Out-of-State Owners
If you’re a non-resident landlord with Oahu rental property, be aware of two additional requirements:
- HARPTA withholding: When you eventually sell your Hawaii property, the buyer is required to withhold 7.25% of the sales price under the Hawaii Real Property Tax Act (similar to FIRPTA at the federal level)
- Local representative requirement: Hawaii law requires non-resident landlords to have a local contact on-island who can assist tenants. This is one reason professional property management is particularly valuable for off-island owners
Federal Tax Obligations
At the federal level, your Oahu rental income is reported on Schedule E of your Form 1040. The good news is that federal tax law provides several powerful deductions that can significantly offset your rental income.
Maximizing Your Deductions: Where the Real Savings Live
While you can’t avoid GET and TAT, you can substantially reduce your income tax burden through strategic use of deductions. Here’s what every Oahu landlord should be claiming.
Depreciation: Your Largest “Paper” Deduction
Depreciation is often the single most valuable tax benefit of owning rental property, and in Hawaii’s high-value market, the numbers can be significant.
The IRS allows you to deduct the cost of your rental property (excluding land value) over 27.5 years for residential properties. In Hawaii, where land values often represent a substantial portion of total property value, getting the land-to-improvement allocation right is essential.
Example: You purchased a condo in Kakaako for $650,000. After allocating $200,000 to land value, your depreciable basis is $450,000. Annual depreciation: $450,000 ÷ 27.5 = $16,364 per year — a deduction that offsets income without requiring any cash outlay.
For landlords who want to accelerate this benefit, cost segregation studies can identify components of your property (appliances, carpeting, cabinetry, landscaping) that qualify for shorter depreciation periods of 5, 7, or 15 years, front-loading your deductions into the early years of ownership.
Commonly Deductible Expenses
Beyond depreciation, Oahu landlords can deduct a wide range of ordinary and necessary business expenses:
Operating Expenses:
- Property management fees (fully deductible in the year paid)
- Insurance premiums (homeowner’s, landlord liability, hurricane/flood)
- Property taxes (Hawaii’s rate is among the lowest nationally at roughly 0.32%, but it’s still deductible)
- Mortgage interest (no cap for rental properties, unlike primary residences)
- HOA/maintenance fees for condo units
- Utilities paid by the landlord
Maintenance and Repairs:
- Plumbing, electrical, and HVAC repairs
- Painting and general upkeep
- Pest control (especially relevant in Hawaii’s tropical climate)
- Mold remediation
- Appliance repairs
Professional Services:
- Legal fees related to your rental activity
- Accounting and tax preparation fees
- GET and TAT payments (deductible on your income tax return as business expenses)
Marketing and Administrative:
- Advertising and listing fees
- Travel expenses to inspect your property (if you’re an off-island owner)
- Home office deduction (if you manage properties from home)
Repairs vs. Improvements: A Critical Distinction
This is where many landlords leave money on the table — or, worse, trigger audit flags. The IRS draws a clear line between repairs (deductible immediately) and improvements (must be capitalized and depreciated over time):
Repairs maintain the property in its current condition: fixing a leaky faucet, patching drywall, replacing a broken window, repainting walls between tenants.
Improvements add value, extend useful life, or adapt the property to a new use: installing a new split AC system, renovating a kitchen, adding a lanai, replacing all windows with hurricane-rated models.
In Hawaii’s tropical climate, this distinction comes up frequently. Replacing a rusted-out section of gutter is a repair. Replacing the entire gutter system with upgraded materials is likely an improvement. When in doubt, document your reasoning and consult with a tax professional who understands Hawaii rental properties.
The $25,000 Rental Loss Allowance
Many Oahu landlords, particularly those with mortgaged properties, show a net rental loss on paper after accounting for depreciation, mortgage interest, and other deductions — even while collecting positive cash flow each month. The IRS allows landlords who actively participate in managing their rental property to deduct up to $25,000 in rental losses against their other income (W-2 wages, business income, etc.), provided their adjusted gross income is under $100,000. This benefit phases out between $100,000 and $150,000 AGI.
For real estate professionals who spend more than 750 hours per year in real estate activities, there’s no limit on rental loss deductions. This is one of the most powerful tax strategies available to landlords, though it requires careful documentation of your time and activities.
Filing Calendar: Key Dates for Oahu Landlords
Staying on top of filing deadlines prevents penalties and keeps your rental business running smoothly. Here’s your annual calendar:
Monthly/Quarterly/Semi-Annual (Depends on Your Filing Frequency)
- GET Form G-45: Due by the 20th of the month following each filing period
- TAT Form TA-1 (short-term rentals only): Same schedule as GET
- OTAT payment (short-term rentals only): Same schedule, paid through City & County portal
Annual Deadlines
| Deadline | Form/Action |
|---|---|
| January 31 | Issue Form 1099-MISC to property managers, contractors paid $600+ |
| April 20 | GET Annual Reconciliation (Form G-49) due |
| April 20 | TAT Annual Return (Form TA-2) due (short-term rentals) |
| April 20 | Hawaii Individual Income Tax Return (Form N-11 or N-15) due |
| April 15 | Federal Individual Income Tax Return (Form 1040 + Schedule E) due |
Note that Hawaii’s income tax filing deadline is April 20, not April 15 like the federal return. This gives you a few extra days, but it also means the deadlines don’t align perfectly — don’t assume filing your federal return means you’re done.
Estimated Tax Payments
If you expect to owe $500 or more in Hawaii income tax for the year, you’re required to make quarterly estimated tax payments. The same applies federally if you expect to owe $1,000 or more. Underpayment penalties apply if you don’t pay enough throughout the year.
Common Tax Mistakes Oahu Landlords Make
After two decades of helping property owners manage their Oahu rentals, we’ve seen the same tax mistakes come up repeatedly. Avoiding these pitfalls can save you thousands.
Reporting Net Instead of Gross for GET
This is the most common and most costly mistake. GET is assessed on gross receipts — every dollar your tenant pays you, including any passed-on GET, maintenance fee reimbursements, and utility payments. Reporting only your “profit” or your net rental income on your GET return will result in an underpayment that the state will eventually catch, plus penalties and interest going back to the original filing.
Failing to File Zero Returns
If your property is vacant for a period and you have no rental income, you must still file your GET return showing zero income. Skipping the filing triggers a late-filing penalty assessment, even though no tax was due. The state doesn’t know you had zero income until you tell them — and they assume the worst when a return goes missing.
Ignoring GET When Using a Property Manager
Using a property management company does not relieve you of your tax obligations. While your property manager may collect and remit taxes on your behalf (as we do at Agency Rentals), the legal responsibility remains with you, the property owner. Make sure you understand what your management company is handling and what falls on you. Also note: the gross amount of rent your property manager collects is your taxable amount for GET purposes — not the net amount after management fees are deducted.
Missing the OTAT
The Oahu county TAT (OTAT) is paid separately from the state TAT through a different portal. Short-term rental operators who diligently file their state TAT sometimes overlook the 3% OTAT entirely. The City & County of Honolulu has been actively auditing OTAT compliance going back to the tax’s inception in December 2021, and many operators have received proposed assessment notices. Don’t be one of them.
Under-Depreciating Your Property
Hawaii’s high property values mean depreciation deductions can be substantial — but only if you allocate land and improvement values correctly. A $700,000 condo with a proper land/improvement split might yield $16,000+ in annual depreciation. An improper allocation that over-attributes value to land could reduce that deduction significantly. A cost segregation study or consultation with a Hawaii-based tax professional can ensure you’re maximizing this benefit.
How Professional Property Management Simplifies Your Tax Life
Managing tax compliance for an Oahu rental property involves tracking multiple taxes, meeting staggered deadlines, maintaining detailed records, and staying current with legislative changes. For many landlords — especially those who own property from the mainland — this administrative burden is reason enough to partner with a professional management company.
At Agency Rentals, our comprehensive property management services include:
- GET collection and remittance on behalf of property owners
- Monthly financial reporting with detailed income and expense breakdowns that simplify tax preparation
- Vendor payment documentation including 1099 issuance for contractors
- Compliance monitoring to keep you current with changing state and county tax requirements
- Coordination with your tax professional by providing organized year-end financial summaries
Our clients consistently report that the time saved on tax administration alone justifies their management fee — to say nothing of the penalties avoided by having a team that handles compliance as part of their daily operations.
The Bottom Line: Don’t Let Taxes Erode Your Returns
Hawaii’s rental property tax landscape is more complex than most mainland markets, but it’s entirely manageable with the right knowledge and systems in place. The key takeaways for Oahu landlords in 2025:
- GET applies to all rental income at 4.5% on Oahu — pass it on to tenants or budget for it
- TAT and OTAT add 13.25% for short-term rentals, making your combined tax rate nearly 18% before income taxes
- Long-term rentals escape TAT/OTAT entirely, which is a significant financial advantage
- Depreciation and deductions can substantially offset your income tax liability — document everything
- File on time, every time — the penalties for non-compliance are severe and there’s no statute of limitations on unfiled GET returns
- You remain legally responsible for tax compliance even if a property manager handles the filings
Getting this right from the start protects your investment and ensures you’re keeping as much of your rental income as possible. Getting it wrong means compounding penalties, interest charges, and the stress of back-filing returns that should have been handled all along.
Need Help Navigating Oahu’s Rental Tax Obligations?
Contact Agency Rentals today at (808) 944-9000 or visit agencyhawaii.com to schedule a free consultation. Our team handles GET collection, financial reporting, and tax-ready documentation for over 1,500 units across Oahu — and we’d be happy to take the tax headache off your plate, too.