Overview: Are Short-Term Rentals Allowed in Kaunakakai, HI?

Yes, short-term rentals are allowed in Kaunakakai, HI, but under strict regulatory conditions. Kaunakakai, located on Molokai Island, falls under Maui County's short-term rental regulations. The market has high regulation levels with permit caps and specific operating requirements that investors must navigate carefully.

Short-term rentals in Kaunakakai operate under Maui County's "Short-Term Rental Home" (STRH) framework, which allows single-family residences to be rented for less than 180 consecutive days. However, the regulatory environment is notably restrictive, with only a limited number of permits available and stringent operational requirements.

How to Start a Short-Term Rental Business in Kaunakakai

Step 1: Zoning and Permit Verification

• Confirm zoning eligibility: Your property must be located in a district where STRs are permitted
• Check permit availability: Kaunakakai falls under the Molokai Community Plan Region, which has specific permit caps
• Verify non-conforming status: Some properties may have grandfathered rights if operating before specific dates

Step 2: State Tax Registration

• Register for GET License: General Excise Tax license ($20 registration fee)
• Register for TAT License: Transient Accommodations Tax license ($5 for 1-5 units, $15 for 6+ units)
• Obtain Hawaii Tax Identification Numbers: Separate numbers for GET and TAT

Step 3: County Permit Application

• Apply for STRH Permit: Submit comprehensive application through Maui County Planning Department
• Designate Manager: Appoint a designated manager available by telephone at all times, able to arrive onsite within one hour
• Meet operational requirements: Ensure compliance with all Maui County STRH regulations

Step 4: Compliance Setup

• Obtain liability insurance: Minimum $1,000,000 in general liability coverage
• Prepare required documentation: Site plan, floor plan, compliance statements
• Establish operational procedures: Parking, advertising, and guest management protocols

Required Documents, Permits, Licenses, and Guidelines

State-Level Requirements

• Form BB-1: State of Hawaii Basic Business Application
• GET License: General Excise Tax registration
• TAT License: Transient Accommodations Tax registration
• Hawaii Tax ID Numbers: Separate identification for GET and TAT
• Federal EIN: Employer Identification Number
• Liability Insurance Certificate: $1M minimum coverage

County-Level Requirements (Maui County)

• STRH Permit Application: Short-Term Rental Home permit
• Property ownership verification: Title report or deed
• Site plan: Property boundaries, structures, parking, easements
• Floor plan: Room identification and maximum occupancy
• Designated manager information: Contact details and availability confirmation
• Community plan compliance: Verification of Molokai region requirements
• Fire safety compliance: Fire extinguisher and safety equipment documentation

Operating Documentation

• House rules: Clear guest guidelines and restrictions
• Emergency contact list: 24/7 availability requirements
• Parking plan: Onsite parking verification (no street parking permitted)
• Waste disposal instructions: Trash collection and disposal protocols
• Compliance statement: Signed attestation of regulatory adherence

Specific Regulations: City, County, and State Level

State of Hawaii Regulations

• Definition: STRs are transient accommodations rented for less than 180 consecutive days
• Tax Requirements:
  • GET: 4% state rate plus 0.5% county surcharge
  • TAT: 10.25% state rate plus county TAT
• Registration: Mandatory GET and TAT licenses for all STR operators
• No statewide permit system: Counties handle local licensing and permits

Maui County Regulations (Applies to Kaunakakai)

• Permit Type: Short-Term Rental Home (STRH) permits for single-family residences
• Duration Limit: Rentals must be for less than 180 consecutive days
• Manager Requirement: Designated manager must be available by telephone and able to respond onsite within one hour
• Parking Restrictions: All parking must be onsite; no street parking permitted
• Advertising Requirements: All advertising must include STRH permit number
• Capacity Limits: STRH operations may have up to 6 bedrooms distributed over 2 licensed STRH dwellings

Kaunakakai (Molokai) Specific Regulations

• Community Plan Region: Subject to Molokai-specific permit caps and requirements
• Limited Permit Availability: As of the latest data, 16 STRH permits have been issued in the Kaunakakai area
• Operational Standards: Must comply with all Maui County STRH operational requirements
• No New Non-Conforming Rights: Properties not grandfathered cannot obtain new non-conforming status

Recent Regulatory Changes

• Senate Bill 2919 (2024): Empowers counties with greater authority to regulate STRs
• County Authority: Maui County can now regulate time, place, manner, and duration of STR operations
• Potential Phase-Outs: Counties can amortize or phase out STR uses in residential or agricultural zones

Contact Information

Maui County Planning Department

• Address: 2200 Main Street, Suite 315, Wailuku, HI 96793
• Phone: (808) 270-7735
• Fax: (808) 270-7634
• Website: www.mauicounty.gov

Maui County Tax Office

• Address: 2100 Imi Kala Street, Suite 101, Wailuku, HI 96793
• Phone: (808) 270-7697
• Website: www.mauicounty.gov

Hawaii Department of Taxation

Molokai District Office:

• Address: 35 Ala Malama Street, Room 101, Kaunakakai, HI 96748
• Phone: (808) 553-5541
• Fax: (808) 553-9878
• General Tax Information: (808) 587-4242
• Website: tax.hawaii.gov

Maui County Department of Finance

• Address: 200 S. High Street, Wailuku, HI 96793
• Phone: (808) 270-7564
• Website: www.mauicounty.gov

Market Performance and Investment Considerations

Current Market Metrics

• Active Listings: 72 properties (as of 2025)
• Average Daily Rate: $183
• Occupancy Rate: 34.1%
• Median Annual Revenue: $15,975
• Revenue Growth: 12.0% year-over-year

Investment Implications

• High Regulation Environment: Strict compliance requirements may limit supply
• Seasonal Performance: Peak season in February, low season in November
• Permit Scarcity: Limited permits available in Kaunakakai area
• Operational Complexity: Strict manager availability and parking requirements

Source References

1. Hawaii Short-Term Rental Laws - GoSummer
2. Maui County STRH Permits Database
3. Hawaii Department of Taxation - Residential Rental Property Guide
4. Kaunakakai Airbnb Market Analysis - AirROI

Important Note: This guide reflects regulations as of the provided sources. Short-term rental laws in Hawaii are subject to frequent changes, particularly following recent legislative updates. Investors should verify current requirements with Maui County authorities and consult with local real estate attorneys before making investment decisions.