If passed, the increase would be in effect for just over four years, sunsetting June 30, 2015.
In opposition to the bill, Daniel Dinell, chair of the American Resort Development Association of Hawaii, testified that the increased tax would hurt the state’s visitor and construction industries. He emphasized that timeshare owners were Hawaii property owners who have made long-term commitments to the state.
“They and their guests are dependable, consistent, and stable visitors who bring substantial tax dollars to Hawaii and continue to come even during economic downturns,” Dinell wrote in his testimony. “They pay a yearly maintenance fee including real property taxes, GET and other fees. No other owner of real property in Hawaii is required to pay an occupancy tax to stay in real property that they already own.”
Dinell expanded, saying, “In fact, Hawaii is the only state to assess the TAT on timeshare owners in the United States.”
Is he correct that Hawaii stands alone in taxing timeshare owners in the same way hotel occupants are taxed?
According to hotspottax.com, a company that charges to file state and local lodging tax returns, there are similar taxes to the TAT used nationally, but they go by different names. Hotspottax.com lists a few of these:
The question, though, isn’t whether such taxes exist – it’s whether any states actually levy them on timeshares?
The answer is that Hawaii is the sole exception.
When Civil Beat asked Ed Hastry, president of the National Timeshare Owners Association if he was aware of another state that charged a transient accommodations-like tax, he replied: “No. And the reason is because we keep lobbyists going to curtail this before it gets off of the drawing board to be presented to the Senate, the House, or representatives for the states. Before it even gets out of committee, we’ve got people that are on top of this to address the situation.”
Hastry said that timeshare owners pay dues and property taxes in maintenance fees annually. “To add a new tax to them is ridiculous… I understand it’s a real battle out in Hawaii.”
The National Timeshare Owners Association is a non-profit “dedicated to educating consumers about their timeshares.” Hastry believes taxing timeshare users, who consistently return to Hawaii each year, is the wrong choice for the state.
“Tourism is a very important item for Hawaii,” Hastry said. “But people that keep coming back and spending money on the island year after year, I think (a tax) is wrong.”
A Civil Beat review of state practices found that some states grant the power to tax timeshare units to individual counties, but most seem to carve out an exception for the unique accommodation.
Timeshares, according to Webster’s New World Law Dictionary, are a form of joint ownership of property under which as many as 52 owners, either singly or severally, receives the use of the property, condominium, or other property for a specified period each year, such as one or more weeks. Timeshare owners may rent their property to short-term tenants, such as tourists.
California, too, has a “transient occupancy tax’, which says the “legislative body of any city, county, or city and county may levy a tax on the privilege of occupying a room or rooms, or other living space, in a hotel, inn, tourist home or house, motel, or other lodging unless the occupancy is for a period of more than 30 days.”
However, the statute goes on to clarify that, “For purposes of this section, the term ‘the privilege of occupying a room or rooms, or other living space, in a hotel, inn, tourist home or house, motel, or other lodging’ does not include the right of an owner of a time-share estate in a room or rooms in a time-share project…”
In non-legal jargon: California has a simliar tax to Hawaii but does not assess it on timeshares.
South Carolina is much the same. It charges hotels and other transient units with an “accommodations tax”, but also excludes timeshares. Under the subheading of “Certain Exchanges of Accommodations Exempt from the Tax,” South Carolina law “exempts from the sales tax on accommodations the gross proceeds accruing or proceeding from “vacation time sharing plans, vacation multiple ownership interests, and exchanges of interests in vacation time sharing plans and vacation multiple ownership interests…”
Some states, like Nevada, leave taxing timeshares entirely up to the counties. Nevada law goes so far as to allow its county commissioners to define the term “transient lodging” and specifically allows that definition to include timeshares.
The Code of Ordinances for Henderson, a suburb of Las Vegas, offers one example of taxing timeshare owners with a lodging tax.
Henderson defines transient lodging (and so taxes) “any facility, structure, or portion of any structure which is occupied or intended or designed for occupancy primarily by transient guests who pay rent for dwelling, lodging, or sleeping purposes, and includes any hotel, resort hotel, condo hotel, motel, residential hotel or motel, time-share project, vacation trailer park, campground, park for recreational vehicles, and any other similar structure, facility, or portion thereof.”
Long story short, transient accommodation taxes can be found just about anywhere you’ll find a hotel. But, while it isn’t unheard of for timeshares to be taxed as transient accommodations by individual counties, it does appear that Hawaii is the only state that demands the tax.