If you rent property, such as a house or a condo in Hawaii, you generally have to pay Hawaii GE (general excise) Tax. Here are some quick facts.
Warning: Every tax situation is different and you may need more forms that are presented here. This is an introductory guide only, and we recommend having your tax forms filed by a professional. Though we try to keep our web pages current, the information presented on this page may be out-dated. Please read all Hawaii State-provided form instructions carefully.
Hawaii General Excise Tax on Rental Property Income
- The State of Hawaii imposes the general excise tax on all gross rents received.
- 2020 UPDATE: The statewide normal tax rate is 4%. But on Oahu, Kauai, and the big island there is a 0.5% surcharge.
- GE tax is computed using gross rents, not net profit, so even if your rental unit is not earning a net profit, you still have to pay GE tax. This is true even if you are showing a loss. Bottom line profit is not a factor.
- Periodic GE Tax returns (form G45) must be filed according to your filing frequency. For more info on filing frequency, please see: How Often Do I File My Hawaii General Excise Tax Forms?
- The tax must be paid semi-annually, quarterly, or monthly depending on how much GE Tax is due.
- A yearly reconciliation form is also required to be filed each year – this form is titled the G49.
- GE Tax paid is generally deductible against your rental income as a tax expense on your federal tax return.
- Standard penalties for not paying GE Tax on a rental unit are 5% per month up to 25% for late filing, interest at about 8% for not paying, and there is another willful neglect penalty of up to 25% as well. There could potentially be criminal charges for willfully not filing as well.
- Tax forms can be filled out and mailed in, filed in person, or completed online.
- If the nature of the property rental is short term, then rental revenue is also likely to be subject to Hawaii’s Transient Accommodations Tax as well.
- You are allowed to charge your tenants enough to cover your GE Taxes, but you should have that written in the lease or rental agreement somewhere. You probably can’t just spring it on them suddenly if the lease agreement does not already include it. Check out: Passing Along Hawaii GE Tax to Your Customers
- For more information visit the Hawaii Department of Taxation.
Tax Services Oahu offers affordable professional Hawaii GE Tax preparation services, and you can also hire us to get you through the licencing process.
We officially recommend that you hire a professional to prepare and file all of your tax forms for you, but to be honest, applying for and paying GE Tax online on your own is not that difficult.
Many individuals, however, forget to file on time and often end up paying late penalties that far exceed the cost of professional preparation, which is why these services are popular. Also, any mistakes that you make by filing on your own could end up costing you money and time.
If you think you might want to hire us to help prepare your taxes, please contact us here. Our email is firstname.lastname@example.org and our phone number is 808-744-5314. Aloha.
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