B&Bs could be paying more in property taxes - Hawaii News Now - KGMB and KHNL

B&Bs could be paying more in property taxes

KAILUA, OAHU (HawaiiNewsNow) - Sharon Price has operated her Sharon's Serenity Bed and Breakfast in Kailua since 1988, and business is good. Customers are repeaters and referrals, and new finds from her web site.

"I have it all. I have a pool. I have nice rooms. I have a nice house. It's a great location to the beach. And it's friendly," she said.

Price pays about $4,000 a year in property taxes, plus a General Excise Tax and a Hotel Room Tax. Now the Real Property Tax Advisory Commission is suggesting parameters to the City Council for a new tax classification for B&Bs and Transient Vacation Units that's not based on zoning.

"This different class would be based on your use of the property as a B&B or a TVU," commission chairman Ray Kamikawa said.

He said the new rate would fall between the residential property tax rate of $3.50 per $1,000 of assessed value and what hotels and resorts pay -- $12.90 per $1,000.

"I don't see them being taxed at the highest rates, perhaps something either at residential or a little bit higher than that," Kamikawa said.

But Price insists any additional tax would hurt.

"I don't think I can stay in business this way," she said.

Kamikawa said the new tax could give the city and state leverage to force compliance from thousands of vacation rental owners and B&B operators who operate outside the tax collector's net.

"I think we wanted to address the B&B and TVU situation in a different way that would foster compliance," he said.

But Price thinks a better plan would be to legalize B&Bs that don't have user permits so the city can collect real property taxes from them.

"That would truly solve the problem, and they would probably get more money," she said.

The commission presents its recommendation to the City Council on December 1. It will then be up to the Council to set the rate.

Price said she has stayed in business for 26 years because her prices are low. She fears paying more in property taxes would change that equation.

Copyright 2014 Hawaii News Now. All rights reserved. 

Powered by Frankly