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FIRPTA & HARPTA Withholding
Both State & Federal withholding may apply to a real property transaction in Hawaii depending on the Seller's resident status.
If You Are Classified as a Foreign Person
Under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), if the Seller is a foreign person or entity (non-resident alien, corporation, partnership, trust or estate), the Buyer must generally withhold a specified percentage of the "amount realized” by the Seller on the sale of the property and forward this amount with the appropriate IRS form.
Such withholding may not be required if the Seller obtains and provides the Buyer with an authorized exemption waiver from withholding. The tax withheld is 10% of the sales price unless a certificate has been processed that allows escrow to withhold a reduced amount.
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If You Are a Non-Resident of Hawaii
HARPTA - Section 235-68, Hawaii Revised Statutes (HRS), provides that a transferee/buyer of Hawaii real property must withhold tax if the transferor/seller is a nonresident person. Under the law, if the Seller is a non-resident person or entity (corporation, partnership, trust or estate), the Buyer must generally withhold a specified percentage of the "amount realized” by the Seller on the sale of the property and forward this amount with the appropriate form to the State Department of Taxation.
Such withholding may not be required if the Seller obtains and provides the Buyer with an authorized exemption waiver from withholding. The tax withheld is 5% of the sales price unless a certificate has been processed that allows escrow to withhold a reduced amount.
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Hawaii Conveyance Tax
The Hawaii Department of Taxation and the Bureau of Conveyance oversee conveyance tax paid for all transfers or conveyance of realty property using a 2 tier system dependent upon the homeowner exemption status of the Buyer.
The lower tier applies when the buyer qualifies for a homeowner exemption; the higher tier when this does not apply.
Sales Price: Less than $600,000
Lower Tier: 10¢ per $100.00 *
Higher Tier: 15¢ per $100.00 *
Sales Price: at least $600,000 but less than $1,000,000
Lower Tier: 20¢ per $100.00 *
Higher Tier: 25¢ per $100.00 *
Sales Price: at least $1,000,000 but less than $2,000,000
Lower Tier: 30¢ per $100.00 *
Higher Tier: 40¢ per $100.00 *
Sales Price: at least $2,000,000 but less than $4,000,000
Lower Tier: 50¢ per $100.00 *
Higher Tier: 60¢ per $100.00 *
Sales Price: at least $4,000,000 but less than $6,000,000
Lower Tier: 70¢ per $100.00 *
Higher Tier: 85¢ per $100.00 *
Sales Price: at least $6,000,000 but less than $10,000,000
Lower Tier: 90¢ per $100.00 *
Higher Tier: $1.10 per $100.00
Sales Price: $10,000,000.00 and greater
Lower Tier: $1.00 per $100.00 *
Higher Tier: $1.25 per $100.00 *
Lower Tier = Buyer is eligible for a county homeowner's exemption.
High Tier = Buyer is ineligible for a county homeowner's exemption
* rounded to the nearest 10¢
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