Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 237D - TRANSIENT ACCOMMODATIONS TAX › Section 18-237D-1-02 - "Fair market rental value", defined

Current through June, 2024
As used in this chapter, "fair market rental value" means an
				amount equal to one-half the gross daily maintenance fees that are paid by the
				owner, are attributable to the time share unit, and include maintenance costs,
				operational costs, insurance, repair costs, administrative costs, taxes, other
				than transient accommodations taxes, and other costs including payments
				required for reserves or sinking funds. The taxpayer shall use gross daily
				maintenance fees, unless the taxpayer proves or the director determines that
				the gross daily maintenance fees do not fairly represent fair market rental
				value taking into account comparable transient accommodation rentals or other
				appraisal methods.
Example 1.
A, a time share interval owner, pays
				$700 annually in maintenance fees for a time interval period of seven days. The
				daily fair market rental value is calculated as follows:
(1) Divide the annual maintenance fees for
			 the time interval period by seven days to obtain the gross daily maintenance
			 fee ($700 ÷ 7 days = $100).
(2) Divide the gross daily maintenance fee by
			 two to obtain one-half the gross daily maintenance fee ($100 ÷ 2 = $50).
To determine the total fair market rental value for the
				interval period, the daily fair market rental value is multiplied by seven (the
				number of days that the resort time share vacation unit is occupied by the time
				share interval owner or by some other person but not rented).
Example 2.
Assume the same facts as in Example 1,
				except that A only occupied the resort time share vacation unit for five days.
				To determine the total fair market rental value, the daily fair market rental
				value is multiplied by five days (the number of days that the unit was
				occupied).
Example 3.
B, a time share interval owner, has a
				time interval period of fourteen days. B occupied the resort time share
				vacation unit for seven days and in violation of the rules of the time share
				vacation plan, rented the remaining seven-day period to someone else. The plan
				manager is liable for the transient accommodations tax on the daily fair market
				rental value of the unit for the fourteen days. B is not liable for the
				transient accommodations tax.
Example 4.
C, a time share interval owner, has a
				time interval period of seven days. C was charged an additional amount by X for
				the rental of the unit for three additional days. Although C occupied the unit
				for ten days, the daily fair market rental value would be multiplied by seven
				days to obtain the total fair market rental value that is subject to the
				transient accommodations tax on time share occupancy. X is subject to the
				transient accommodations tax and the four percent general excise tax on the
				gross rental income received from C for the three additional days. X may
				visibly pass on these taxes to C.
Example 5.
D, a time share interval owner, has
				the right to use a two-bedroom, two-bath unit for seven days. D occupied the
				unit for the seven days; however, instead of using the whole unit, D decided to
				use only one bedroom and one bath. The rest of the unit (one bedroom and one
				bath) was "locked out" and D can bank this balance and use it another time. D
				will not be subject to the transient accommodations tax on the occupancy of the
				whole unit. The portion of the unit which was "locked-out" would not be
				included in the total fair market rental value subject to the transient
				accommodations tax on time share occupancy. This allocation may be based on the
				ratio of the square footage of the "locked out" portion to the total square
				footage of the whole unit.