Potential buyers ask this question a lot: "Can I vacation rent this property?" Most often, if the property is in a popular area, like Hanalei or Koloa or some nice quiet rural area, you might think the answer would be yes. And, in fact, just a couple of short years ago, it would have been yes. Not so fast...
Under the current Ordinance 864, passed in March of 2008, only certain areas of the island are zoned as Vacation Destination Areas (VDAs). This means that, unless a property outside of a VDA was a LEGAL vacation rental prior to the new law and registered as such by the county's deadline, it can no longer be offered as a vacation rental. A "legal vacation rental" means that the owner paid transient accommodations, general excise, and federal income taxes on it.
Let's back up a bit for those who have not considered this option before. A (transient) vacation rental - or TVR - is a property that is rented for under 6 months. Most TVRs rent for a few nights to a couple of weeks. Many investors find this to be an attractive alternative to long-term rentals, as it more readily allows them to use their own property when they visit the island.
So now, when you talk to your agent about property on Kauai, be very clear as to your intention for the property. If you want to move here or just use your home as a 2nd home, there should be no issues. Even if you intend to long-term rent the property you purchase, you need not worry about the new TVA Ordinance. However, if you are interested in vacation renting your property, please be clear with your agent. S/He can verify any home on your list is a legal vacation rental already, or in an area zoned as a VDA, such as Princeville and Po`ipu.
