Kapaau, Hawaii Short Term Rental Regulations Guide for Airbnb hosts

Overview: Are Short-Term Rentals Allowed in Kapa'au, HI?

Explicit Answer: Yes, short-term rentals are allowed in Kapa'au, HI, but under strict regulatory conditions.

Kapa'au, located on the Big Island (Hawaii County), falls under Hawaii County's comprehensive short-term rental regulations. While short-term vacation rentals (STVRs) are permitted, the market is highly regulated at both state and county levels. Hawaii County has implemented some of the strictest regulations in the state to balance tourism revenue with housing availability for residents.

What do Airbnb hosts actually earn in Kapaau?

Kapaau hosts earn a median $30,802/year with $198 ADR and 58% occupancy.

Top performers pull in $50,777+ per year.

See the full Kapaau market breakdown

How to Start a Short-Term Rental Business in Kapa'au, HI

Step-by-Step Process

Zoning Verification: Confirm that your property is in an allowable zoning district for STVR operation. Hawaii County generally restricts STVRs in residential and agricultural zones unless the property has a Non-Conforming Use Certificate (NUC).
Property Assessment: Evaluate whether your property qualifies as:
- Owner-hosted: You reside on the property and rent bedrooms, guest houses, or 'ohana dwellings
- Operator-hosted: A resident operator manages the rental
- Unhosted: Entire property rental with no on-site operator
Registration Application: Apply for Hawaii County Transient Accommodations Rental (TAR) registration through the Hawaii County Planning Department.
License Acquisition: Obtain state Transient Accommodations Tax (TAT) license from the Hawaii Department of Taxation.
Compliance Setup: Implement operational standards including noise limits, parking requirements, and occupancy limits.
Local Contact Arrangement: Designate a 24/7 local contact person available to address guest issues.

Required Documents, Permits, Licenses, and Guidelines

State-Level Requirements

Transient Accommodations Tax (TAT) License: Mandatory registration with Hawaii Department of Taxation
General Excise Tax (GET) Registration: Required for all business operations
TAT and GET Filings: Regular tax remittance (TAT at 10.25%, GET at 4.5%)

County-Level Requirements

Hawaii County TAR Registration: Required for all short-term rentals (180 days or less)
Hawaii County Transient Accommodations Tax: Additional 3% tax payable to county
Building Permits: Up-to-date permits and inspections
Property Tax Classification: May affect residential property tax rates

Operational Documents

Local Contact Information: 24/7 contact details
Guest Limits Documentation: Occupancy maximums
Parking Plans: Off-street parking arrangements
Noise Control Measures: Compliance protocols

Specific Regulations for Short-Term Rentals

Hawaii County Regulations (Applicable to Kapa'au)

Zoning Restrictions:

STVRs primarily permitted in resort and commercial zones
Residential and agricultural zones generally prohibited without NUC
Owner-occupancy requirements in some residential areas

Operational Standards:

Guest Limits: Specified maximum occupancy per unit
Parking Requirements: Dedicated off-street parking spaces
Noise Restrictions: Community-friendly sound level limits
Event Limitations: Restrictions on parties and large gatherings

Registration Categories:

Hosted Rentals: Allowed if homeowner resides on property
Non-Conforming Use Certificates: For properties operating before regulations
Temporary Registration: One-year conditional registration for properties without building permits

Enforcement Measures:

Regular compliance monitoring
Penalties for non-registration or violation
Possible license revocation for repeat offenders

Hawaii State Regulations

SB2919 (2024 Legislation):

Provides counties with "home rule" authority to regulate transient accommodations
Expands definition of transient accommodations to include shelters and vehicles with sleeping accommodations
Allows counties to phase out STVRs in residential and agricultural zones
Takes effect July 1, 2040

Tax Compliance Requirements:

TAT Registration Number: Must appear in all advertising
Registration Number: Required on all listings
Local Representative Contact: Required in all advertisements
Regular Tax Filings: Monthly or quarterly depending on volume

Contact Information

Hawaii County Planning Department

Phone: (808) 961-8288
Website: Hawaii County Planning Department
Address: 101 Aupuni Street, Suite 3, Hilo, HI 96720

Hawaii County Transient Accommodations Rental Program

Website: Hawaii County TAR
Consider.it Platform: Public Input Portal

Hawaii Department of Taxation

Website: Hawaii Tax Online
Phone: (808) 587-4242

Hawaii County Finance Department

Phone: (808) 961-8211
Website: Hawaii County Transient Accommodations Tax

Financial Considerations for Investors

Tax Obligations

State TAT: 10.25% of gross rental income
State GET: 4.5% of gross rental income
Hawaii County TAT: 3% of gross rental income
Total Combined Tax Rate: Approximately 17.75%

Property Tax Implications

Registration may trigger reassessment to commercial rates
Impact on residential property tax exemptions

Operational Costs

Management fees (if using professional services)
Utilities and maintenance
Cleaning and turnover services
Marketing and booking platform fees
Insurance (increased liability coverage recommended)

Market Considerations for Kapa'au Area

Location Advantages

North Kohala region with established tourism infrastructure
Proximity to Hawi and other North Kohala attractions
Historic cultural sites and natural attractions

Regulatory Environment

Hawaii County working on comprehensive regulatory framework
Economic impact study underway (completion expected February 2025)
Pending implementation of new registration requirements

Investment Risks

Potential zoning changes under new legislation
Increasing regulatory compliance costs
Competition from legal resort developments
Limited hotel accommodation alternatives in rural areas

Links to Source Pages

Primary Regulatory Sources

Industry Analysis Sources

Hawaii Appleseed Housing Impact Report (Referenced in Big Island Now article)
University of Hawaii Economic Research Organization - STVR Data
Travel Technology Association Report

Public Input and Commentary

Important Note: Kapa'au does not have separate municipal regulations; all rules applicable to Kapa'au fall under Hawaii County jurisdiction. The area is currently subject to evolving regulations, with a comprehensive economic study underway that may influence future rulemaking. Investors should monitor regulatory developments and consult with local planning authorities before making investment decisions.

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Ask the AI Advisor about Kapaau

Kapaau is a small, unhurried community tucked into the North Kohala district of Hawaii County, on the northern tip of the Big Island of Hawaii. With a population of just a few hundred residents, the town has the character of a quiet rural Hawaiian village, ringed by green pastureland, eucalyptus groves, and dramatic ocean bluffs. Kapaau is best known as the home of one of Hawaii's most iconic cultural landmarks, the King Kamehameha I statue, and it serves as a gateway to the wild, scenic northern reaches of the island. It sits roughly 55 miles north of Kailua-Kona along the island's west coast and well over an hour from the larger population centers of Waimea and Hilo.

The King Kamehameha I statue in Kapaau stands in front of the North Kohala Civic Center, a striking nine-foot bronze figure depicting the chief who unified the Hawaiian Islands and founded the Kingdom of Hawaii. The statue is ceremonially draped in lei during the annual Kohala King Kamehameha Day celebration each June, and it remains one of the most photographed landmarks on the northern Big Island. Just a few minutes' walk from the town's small commercial center, it is easily the most visited site in Kapaau itself.

Just a short drive east of town, the Pololu Valley Lookout marks the end of the road in North Kohala. From this bluff, visitors gaze down into a steep, lush valley that drops toward a black-sand beach, with the rugged Hamakua Coast stretching into the distance. A hiking trail leads from the overlook down into the valley floor, making it a popular spot for travelers seeking a quieter, more rugged alternative to the Big Island's more developed beaches.

A bit to the south, Pu'ukoholā Heiau National Historic Site preserves the massive stone temple built by Kamehameha I in the late 1700s as part of his campaign to unite the Hawaiian Islands. About a 30-minute drive from Kapaau, the site overlooks Kawaihae Harbor and offers interpretive trails and a small visitor center. The neighboring town of Hawi, with its art galleries, coffee shops, and plantation-era storefronts, sits only about five minutes from Kapaau, while Lapakahi State Historical Park, the remains of an ancient coastal fishing community, lies roughly 20 minutes down the coast.

Kapaau's appeal as a short-term rental base lies in its authentic, off-the-beaten-path feel. It offers visitors a taste of pre-resort Hawaii while keeping them within easy reach of dramatic valleys, sacred historical sites, and the cultural heart of North Kohala, all well away from the busier resort corridors further south along the Kohala Coast.

Kapaau, Hawaii

Challenging To Investors

STR Regulations for Kapaau, Hawaii