Visitor Destination Area (VDA) FAQ
What are the VDA and TVR?
As one of the biggest pieces of legislation to govern Kauai real estate, the Visitor Destination Area (or VDA) and the Transient Vacation Rental Ordinance (or TVR) came into effect in the 1980s. However, TVRs operating outside of a Visitor Destination Area could apply for a non-conforming permit up until 2008. The legislation was created in order to track—and lessen—the number of vacation rental properties in Kauai. As a result of the ordinance, all vacation rental properties in Kauai had to register with the County of Kauai in order to legally operate as a vacation rental.
Why was the TVR system introduced?
The TVR system was implemented as a response to the community’s concerns over the erosion of the fabric of the rural communities and the number of homeowners turning arable land into “Airbnb farms”—where homeowners decided that it was more profitable to rent their home out to vacationers than to grow food for the local community. The law expressly prohibits TVR usage from being set up outside of the official Visitor Destination Areas.
What happens if I ignore the TVR?
If your property doesn’t have a TVR or isn’t in a VDA then you cannot legally operate a homestay, a bed and breakfast, or rent your property out as a vacation income property. Failure to comply with the law can result in you having to go to court, receive civil infraction fines, and the County of Kauai might even request that law enforcement step in and criminal charges be lobbied against serial offenders.
How do I renew a TVR?
You can renew a Transient Vacation Rental permit through the Kauai government website. The application package has all the pertinent information that you must know before filing and they request that you do not submit your application more than 60 days prior to your permit expiring but no less than 10 days should be remaining on your permit when you submit your application.
Can I still apply for a TVR outside of the Visitor Destination Area?
The deadline for TVRs outside of the visitor destination area was October 15th, 2008. The owners who were lucky enough to get their hands on one were provided with a nonconforming use certificate that requires renewal annually. If they fail to renew in time, their property can no longer be used as a vacation rental property.
Where are the TVRs?
There are currently over 3,000 active TVR properties on the entire island of Kauai and if you plan to purchase a vacation rental property outside of a VDA, you should confirm that the nonconforming TVR permits are up to date, active or will transfer with the ownership of the property.
What is GET and Why is it Important?
GET, or General Excise Tax is a tax imposed on business activity by the State of Hawaii. In other words, if you are running an Airbnb or VRBO out of your home as a business, then you need to be filing the necessary forms to pay your General Excise Tax. The tax is computed from the total gross income of your home-based business and not off of the profits. GET currently sits at 4.166%.
What is TAT?
TAT or Transient Accommodation Tax, is imposed on gross income derived from the likes of renting your home for vacation purposes. TAT is charged for all hotels and vacation properties at a rate of 9.25%, although that will increase to 10.25% starting January 2018.
Where are the Visitor Destination Areas?
The three main visitor destination areas in Kauai are in Princeville, Poipu, and Kapaa, but there are some exceptions to that rule. Before purchasing any prospective property in Kauai, you should consult with the County of Kauai Planning Department as well as a local real estate specialist who can help you avoid the potential pitfalls of the Kauai real estate market.