Which statement about taxes on rental income in Hawaii is incorrect?

The statement regarding the inability to pass on the cost of the general excise tax to the tenant is incorrect because, in Hawaii, landlords typically have the option to include this tax in the overall rental cost charged to tenants. General excise tax is a tax on business activities in Hawaii, and landlords often factor this tax into their rental pricing structure.

In contrast, the other statements accurately reflect tax obligations and practices. The 4 percent general excise tax applies to most rental income, and landlords are required to collect this tax from tenants, effectively incorporating it into the total rent. The transient accommodations tax, applied to short-term rentals of less than 180 days, can also be passed on to tenants, which is a common practice. Moreover, the rate of 10.25 percent for the transient accommodations tax applies correctly when rentals are for a period of less than 180 days, making it an important consideration for landlords in the state. Thus, the key detail that makes the focus on option B incorrect is the nature of how the general excise tax is treated in the rental process.