Are you familiar with HARPTA and FIRPTA, Hawaii Withholding Tax and Exemptions? Yes, just like any other state, Sellers could endure a withholding tax in Hawaii when closing on their home or condo. Although Capital Gains are a good problem to have, will you be confronting a tariff when selling your Maui property?
Thanks to Fidelity National Title, they have been providing PDFs and documents. They help keep our clients apprised and current on the changing Hawaii Laws.
What is HARPTA?
HARPTA, Hawaii Real Property Tax Act withholds 7.25% from any Non-Hawaii Resident or Entity who are selling with capital gains. Before you start to get anxious, there are waivers that Escrow will provide. In addition, if performing a 1031 Exchange or taking a loss, there are exemptions. Another exemptions, it is a Hawaii Entity or LLC.
Filing an exemption? In Escrow, the Seller needs to submit a N288B Form to the state. Escrow will provide the form but it is the Sellers responsibility to complete and submit. If denied, the day after closing, the Seller is able to submit the N288C Form.
What is FIRPTA?
FIRPTA, Foreign Investment Real Property Tax Act withholds 15% from any Foreign Seller. Again, Escrow will help execute the appropriate paperwork for any applicable exceptions.
It is recommended & best practice to speak with a Certified CPA for tax questions, implications, or projections. Realtors & other professionals are not permitted to give tax advise but only to make one privy.
If you have any questions, prior to listing your property, phone Kimberly Drechsel directly. Living Maui Real Estate, LLC has helped Sellers over the years overcome objections and provides the best resources available. Not only will she provide a Seller’s Net Sheet, she will get you in contact with an accountant to discuss your opportunities & possibilities.