DON'T MISS A NEW LISTING AGAIN!
FREE AUTOMATED EMAIL UPDATES
What is HARPTA?
HARPTA stands for Hawaii Real Property Tax Act (Hawaii Revised Statutes &235-68). It requires a Buyer of real property from a Non-Resident Seller of Hawaii to withhold 5% of the amount realized and remit it to the Hawaii Department of Taxation within 20 days of Closing unless an exemption applies. Generally, the amount realized is considered to be the purchase price of the property. Effective September 15, 2018, all transactions closing on or after this date will require a withholding of 7.25% of the realized amount.
The 5% withholding represents an estimate of the Hawaii capital gains tax that may be owed by the Non-Resident Seller.
The Hawaii Association of REALTORS Purchase Contract provides that Escrow is to withhold and remit the HARPTA amount to the Hawaii Department of Taxation unless the Seller provides the Buyer with a certificate of exemption or waiver from HARPTA.
The burden of proof falls on the Seller to prove that an exemption or waiver applies and for the Buyer to acknowledge and approve the Sellerʻs exemption or waiver prior to the Closing of Escrow. The exemption or waiver application is known as Form N-288B. This form must be filed no later than 10 workings days prior to closing or it will not be accepted.
Under Hawaii law, it is the Buyerʻs responsibility to determine if the Seller is a Non-Resident of Hawaii and that the proper withholding amount is remitted to the Hawaii Department of Taxation on a timely basis.
This information is presented for informational purposes only and is deemed reliable but is not guaranteed. It is not our intention to provide any legal, financial or business advice. For specific information, please consult a qualified advisor.