Page 6 - Foreign Investor Guide - Hawaii
P. 6
HARPTA - The Hawaii Real Property Tax FIRPTA - Under current federal law, if a foreign
Act (1990) which says that a sale of Hawaii person sells US real property, the buyer is obligated to
Real Estate by a Non-Hawaii resident is withhold 10% of the gross sales price and remit this to the
subject to a Hawaii State Tax. The tax liability lRS. However, pursuant to the Protecting Americans from
belongs to the seller, and 7.25% of the total Tax Hikes Act of 2015, which became law on December
sales price will be withheld and submitted to 18, 2015 (the “PATH Act”) the required 10% withholding
the State of Hawaii Department of Taxation. will increase to 15% for all closings occurring on or after
February 17, 2016, except those wherein the sales price
There are some exemptions from this is greater than $300,000 and does not exceed $1,000,000
withholding: and the buyer acquires the property for use as a personal
• Hawaii Resident (Must fill out form N-289, residence. Under the circumstance, a reduced withholding
which is provided to seller in opening of 10% will apply.
instructions)
• Foreign corporations and partnerships Sales Price $300,000 or less and the buyer No
which are registered to do business in the acquires as personal residence Withholding
state of Hawaii (Must fill out form N-289, Sales Price more than $300,000 but not 10%
which is provided to seller in opening more than $1,000,000 and the buyer Withholding
instructions) acquires as personal residence
• Property used as principal residence for All transactions - Any Sales Price and the 15%
year prior to the sale and sales price does buyer NOT acquiring as personal residence Withholding
not exceed $300,000
In short, if a foreign person is selling a US 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 of Taxation:
Oahu 808.587.4242
Maui 808.984.8500 • Buyer acquires for use as a personal residence and
Kauai 808.274.3456 sales price not more than $300,000
Big Island-Hilo 808.974.6321 • Seller provides Non-Foreign Affidavit
or visit www.hawaii.gov/tax • Seller provides a Withholding Certificate from the IRS
which excuses the withholding
FIRPTA - Internal Revenue Service
www.irs.gov and search for FIRPTA • The amount realized by the seller is zero
• The property is acquired by the United States or a
political subdivision thereof
