Overview: Short-Term Rental Allowances in Koloa, HI

Yes, short-term rentals are allowed in Koloa, Hawaii, but with significant restrictions. Short-term rentals (defined as accommodations for less than 180 days) are only permitted within designated Visitor Destination Areas (VDA) on Kauai. Koloa is partially designated as a VDA, meaning only certain areas within Koloa allow legal short-term rental operations. Outside of these VDA boundaries, new short-term rental applications are not accepted, and only properties with grandfathered non-conforming use certificates can operate legally.

How to Start a Short-Term Rental Business in Koloa

For Properties Within Visitor Destination Areas (VDA)

1. Verify VDA Status: Confirm your property is located within the designated Visitor Destination Area boundaries for Koloa/Poipu region
2. Choose Rental Type: Determine whether you'll operate a Transient Vacation Rental (TVR) or Homestay
3. Property Preparation: Ensure compliance with safety and operational requirements
4. Apply for Permits: Submit appropriate applications to Kauai County Planning Department
5. Tax Registration: Register for General Excise Tax (GET) and Transient Accommodation Tax (TAT)

For Properties Outside VDA

New short-term rental applications are not permitted. Only properties with existing non-conforming use certificates issued before 2008 can operate legally and must renew annually.

Required Documents, Permits, Licenses, and Guidelines

Essential Permits and Licenses

• County Planning Department Approval: Required for all short-term rentals
• GET License: General Excise Tax license from Hawaii Department of Taxation (4.7120% rate)
• TAT Registration: Transient Accommodation Tax registration (10.25% rate as of 2018)

Required Documentation

• Property Ownership Documentation: Proof of legal ownership
• Site Plans and Floor Plans: Detailed property layouts
• Evacuation Plan: Emergency evacuation procedures for guests
• Contact Information: Complete owner and manager contact details
• Parking Plans: On-site parking arrangements
• Neighbor Notification: Documentation of surrounding property notification

Operational Requirements

• Maximum Occupancy: 2 adult occupants per bedroom
• Annual Renewals: All permits require annual renewal
• Record Keeping: Maintain detailed rental records and tax documentation
• Safety Compliance: Meet all fire safety and building code requirements

Specific Regulations for Short-Term Rentals

Kauai County Regulations

Transient Vacation Rentals (TVR)

• Definition: Dwelling units offered for occupancy of 180 days or less for compensation
• Location Restrictions: Only permitted within designated VDAs (Princeville, Poipu/Koloa, and Kapaa coastal areas)
• Operational Standards: Must maintain minimum safety and operational standards
• Renewal Requirements: Annual renewal applications due at least 2 months prior to expiration date

Homestays (Bed & Breakfast)

• Owner Residency: Owner must reside on-site and be physically available for guests
• Room Limitations: Maximum of 3 guest rooms per homestay operation
• Guest Capacity: No more than 2 adult occupants per room
• Operational Requirements: Owner must provide direct guest services and oversight

Non-Conforming Use Certificates (Grandfathered Properties)

• Application Deadline: Closed permanently as of October 15, 2008
• Annual Renewal: Required to maintain legal operating status
• No Grace Period: Late renewals result in immediate forfeiture of rights
• Transfer Requirements: New owners must update registration within 30 days of sale

State-Level Regulations (Hawaii)

Senate Bill 2919 (Effective May 2024)

• County Authority: Grants counties power to regulate STRs through zoning ordinances
• Residential Zone Restrictions: Counties may prohibit vacation rentals in residentially-zoned areas
• Grandfathering Provisions: Existing legal operations likely to be protected
• Minimal Kauai Impact: Kauai's existing VDA system already provides similar protections

Tax Obligations

• General Excise Tax: 4.7120% on gross rental income
• Transient Accommodation Tax: 10.25% on gross rental income
• Income Tax: Standard Hawaii and federal income tax on rental profits

Enforcement and Penalties

• Cease & Desist Orders: Issued for unpermitted operations
• Civil Infractions: Monetary fines for violations
• Criminal Charges: Potential for repeat offenders
• Property Forfeiture: Loss of rental rights for non-compliance

Contact Information for Local Authorities

Kauai County Planning Department

Address: 4444 Rice Street, Suite A473, Lihue, Hawaii 96766
Phone: Contact main county number for planning department connection
Mailing Address: All renewal applications must be sent via certified mail to the above address
Website: www.kauai.gov/Government/Departments-Agencies/Planning

Planning Commission

Oversight: Reviews and approves short-term rental applications and regulations
Meeting Information: Available through county website

Complaint Reporting

Process: Contact Planning Department and request to speak with an inspector
Required Information: Property owner name, tax map key, street address, website advertisements, activity descriptions

Source Links and Additional Resources

Primary Government Sources

• Kauai County TVR Information: www.kauai.gov/Government/Departments-Agencies/Planning/Transient-Vacation-Rentals
• Approved TVR/Homestay List: www.kauai.gov/files/assets/public/v/88/planning-department/documents/tvr/dto_r1_updated.pdf
• TVR Renewal Application Forms: Available through county planning department website

Legal Framework Documents

• Ordinance 904 (TVR): Establishes transient vacation rental regulations
• Ordinance 1002 (Homestays): Governs bed & breakfast/homestay operations
• Ordinance 950 (Fees): Sets permit and renewal fee structures

Professional Resources

• Hawaii STR Regulations Overview: hawaiistr.com/str-regulations/
• Industry Analysis: www.kauaikahuna.com/about-us/blog/senate-bill-2919-and-the-fate-of-short-term-rentals-on-kauai-2/

Important Notes for Investors

• Property Transfer: Sellers must provide complete TVR documentation to buyers
• Due Diligence: Verify current permit status before purchase
• Renewal Timing: Submit renewal applications via certified mail 2+ months before expiration
• No Grace Period: Late renewals result in immediate permit forfeiture
• VDA Verification: Confirm property location within designated visitor destination areas before investment

This regulatory framework demonstrates Kauai's balanced approach to protecting local housing while maintaining a viable tourism industry. The county's 15-year-old VDA system serves as a model that other Hawaiian islands are now adopting following the passage of Senate Bill 2919.