Federal Tax Guide for Honolulu and Oahu Households

Federal rules for military households and condo owners on Oahu

PCS moves to and from Oahu

Many Oahu households arrive and leave on military orders, including families at Joint Base Pearl Harbor-Hickam and Schofield Barracks. A permanent change of station includes a move from home to a first post of active duty, a move between permanent posts, and a move from the last post to home or a nearer point in the United States within 1 year of ending active duty or within the period allowed under the Joint Travel Regulations. Government-provided moving and storage is not income, and neither are dislocation allowances, temporary lodging expenses, temporary lodging allowances or move-in housing allowances. Reasonable unreimbursed costs of moving household goods and personal effects, and travel including lodging but not meals, are deductible, figured on Form 3903. Storage counts only within 30 consecutive days after your goods leave the old home (IRS Publication 3). Sources: IRS Publication 3 (2025), Armed Forces' Tax Guide; IRS Instructions for Form 3903, Moving Expenses.

Housing allowances and the home you left behind

BAH is excluded from income, but you may still deduct mortgage interest and real estate taxes paid with BAH if you itemize (IRS Publication 3). If orders place you at a duty station at least 50 miles from your main home, or you live in government quarters under orders, for more than 90 days or indefinitely, you can choose to suspend the 5-year test period for the home sale exclusion for up to 10 years (IRS Publication 3; IRS Publication 523). That can let a family that rents out a mainland house during an Oahu tour still meet the 2-year use test when it sells. If you convert a former home to a rental, depreciation is based on the lesser of its fair market value or adjusted basis on the date of conversion (IRS Publication 527). Sources: IRS Publication 3 (2025), Armed Forces' Tax Guide; IRS Publication 523 (2025), Selling Your Home; IRS Publication 527 (2025), Residential Rental Property.

Renting out an Oahu condominium

Condo rental income and ordinary expenses are normally reported on Schedule E, Part I. A condo owner can also deduct dues or assessments paid for maintenance of the common elements. Special assessments for improvements are not deductible, but you may recover your share of the cost through depreciation. Publication 527 lists residential rental property with a 27.5-year recovery period under the General Depreciation System and, for property placed in service after 2017, a 30-year period under the Alternative Depreciation System (40 years for most property placed in service earlier). Any personal use requires dividing expenses. If personal use exceeds the greater of 14 days or 10% of the days rented at a fair price, a rental loss cannot offset other income and the excess carries forward (IRS Publication 527). If the unit is not used as a home, an owner who actively participates in a rental activity may deduct up to $25,000 of rental loss, phased out between $100,000 and $150,000 of modified AGI; that allowance does not apply when the average guest stay is 7 days or less, because the activity is then not a rental activity (IRS Publication 925). Sources: IRS Publication 527 (2025), Residential Rental Property; IRS, About Schedule E (Form 1040); IRS Publication 925 (2025), Passive Activity and At-Risk Rules.

Red Hill payments and IRS relief on Oahu

The IRS announced that Department of Defense payments to certain civilians affected by the fuel release from the Red Hill Bulk Fuel Storage Facility, including federal civilian employees and people not employed by the federal government, for lodging, meals and personal property damage are excludable from gross income (IRS news release HI-2023-04, citing Announcement 2023-07). People who had already reported those payments as income were told to consider filing Form 1040-X. The IRS notes that news items may not be updated after release. For disasters, the IRS automatically identifies taxpayers located in a covered area and applies postponed deadlines; its 2026 severe storm relief included Honolulu County, and the postponed date, moved to Aug. 20, 2026, has passed (IRS news release HI-2026-01). Beginning in 2026, personal casualty losses may include losses from state-declared disasters if the other requirements of the tax code are met (IRS). Sources: IRS news release HI-2023-04, Red Hill fuel spill relief payments (April 5, 2023); IRS news release HI-2026-01, Hawaii severe storms relief (April 10, 2026, updated May 12, 2026); IRS, Casualty loss deduction expanded and made permanent; IRS, Around the nation: Hawaii.

Outside the scope of this page

Hawaii general excise tax, state and county transient accommodations tax, and county short-term rental permitting rules are state and county matters outside this page, which covers federal tax rules only.