Page 33 - Home Buyers and Sellers Guide - Hawaii

HARPTA
The Hawaii Real Property Tax Act (HARPTA) of 1990 says that a sale of Hawaii Real Estate by a Non-Hawaii
resident is subject to a Hawaii State Tax. The tax liability belongs to the seller, and 7.25% of the total sales price
will be withheld and submitted to the State of Hawaii Department of Taxation.

There are some exemptions from this withholding:
• Hawaii Resident (Must fill out form N-289, which is provided to seller in opening instructions)
• Foreign corporations and partnerships which are registered to do business in the state of Hawaii
(Must fill out form N-289, which is provided to seller in opening instructions)
• Property used as principal residence for year prior to the sale and sales price does not exceed $300,000

FIRPTA
Under the Foreign Investment in Real Property Tax Act (FIRPTA) of 1980, if a foreign person sells U.S. real
property, the buyer is obligated to withhold 10% of the gross sales price and remit this to the Internal Revenue
Service (lRS). However, pursuant to the Protecting Americans from Tax Hikes Act of 2015, which became law on
December 18, 2015 (the “PATH Act”), the required 10% withholding will increase to 15% for all closings occurring
on or after February 17, 2016, except those wherein the sales price is greater than $300,000 and does not exceed
$1 million and the buyer acquires the property for use as a personal residence. Under the circumstance, a
reduced withholding of 10% will apply.

Sales Price $300,000 or less and the buyer acquires as personal residence No Withholding
Sales Price more than $300,000 but not more than $1,000,000 and the buyer acquires as 10% Withholding
personal residence
All transactions; any Sales Price and the buyer NOT acquiring as personal residence 15% Withholding

In short, if a foreign person is selling a U.S. real property interest, the
following parameters apply UNLESS THERE IS AN EXCEPTION FROM
WITHHOLDING. For more information on these taxes,
please call the appropriate departments
or visit their website.
No withholding is required under the following circumstances:
HARPTA — State of Hawaii Department
• Buyer acquires for use as a personal residence and sales price not of Taxation:
more than $300,000. Oahu: 808.587.4242
Maui: 808.984.8500
• Seller provides Non-Foreign Affidavit Kauai: 808.274.3456
• Seller provides a Withholding Certificate from the Internal Revenue Big Island-Hilo: 808.974.6321
Service (IRS), which excuses the withholding or visit hawaii.gov/tax
• The amount realized by the seller is zero
• The property is acquired by the United States or a political FIRPTA - Internal Revenue Service
irs.gov and search for FIRPTA
subdivision thereof

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