Increase in Real Estate Tax Withholding HARPTA

In the State of Hawaii, when a non-resident (defined as any person other than a Hawaii resident) sells their interest in real estate, there is an applicable tax withholding on the amount realized, which is generally the sales price. The amount withheld has been 5%, however new changes as passed via Senate Bill (S.B) 508, S.D. 1, H.D. 1, C.D. 1, now increase the amount to 7.25% for any transaction that closes on or after September 15, 2018.

As per the Announcement published by the Department of Taxation:

"In sum, a transferee or buyer must withhold 7.25 percent of the amount realized by the transferor on the disposition of Hawaii real property if the transfer occurs on or after September 15, 2018, unless an exemption applies."

There are applicable exemptions, contact us to discuss in greater detail. And for foreign nationals, please keep in mind that there is a withholding by the federal government, via what is commonly referred to as FIRPTA - contact us with any questions.

For non-residents, the process of selling can be a bit tricky to navigate, particularly as it relates to taxation. With pertinent experience in assisting off-island clients (both US mainland residents and foreign nationals), our team is well positioned to assist our clients in the successful sale of their property.  Contact us below to discuss or call 808.385.5034 or 808.392.6657.

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