Rent payments are the heart of a rental agreement, as it is the tenant’s satisfaction of the ongoing financial part of the bargain. Landlords in Hawaii must provide a receipt for all rental payments made by the tenant, with a canceled check serving as a receipt. If the tenant does pay by check a written receipt must be provided if requested by the tenant.
General Excise Tax
In addition to rent, the landlord can charge for the excise tax collected in Hawaii for rental income. Landlords in Hawaii pay an excise tax of 4% on rental income, which is considered gross revenue. The lease agreement must state the incremental amount charged and the rate, which cannot exceed 4.166%. For properties on Oahu landlords must pay a general excise tax of 4% and a county surcharge tax of .50%. The taxes are calculated based on rent received. In this case the percentage charged by the landlord cannot be greater than 4.712%. And again, make sure the excise tax and county surcharge tax amount and percentages are written into the lease agreement.
Condo Association Dues
Finally, there is an important aspect of rental management that all Hawaii landlords should be aware of when the property is a condominium. Hawaii has a condominium law that regulates the rights and obligations of condominium owners, developers and other parties associated with condominiums, along with the management, governance, and operations of condominiums. One important aspect of a condominium rental is the ability of the condo association to ask the tenant to pay any delinquent condo association dues. The amount paid cannot exceed the tenant’s monthly rent, and it reduces the total rent amount owed to the landlord. Landlords are not allowed to retaliate against the tenant.