HARPTA TAX LAWS 2023: Selling in Hawaii
Updated: Feb 6
The Hawaii Real Property Tax Act (HARPTA) is a tax law that applies to resident aliens and U.S. citizens who sell real property in Hawaii. This law requires a withholding of 7.5% on the gross proceeds of the sale of the property, which is paid to the state of Hawaii. The purpose of the HARPTA tax is to ensure that non-resident property owners pay their fair share of taxes on the sale of their property in Hawaii.
The HARPTA tax is typically withheld by the buyer or the closing agent at the time of sale and is sent to the state of Hawaii. The seller is responsible for providing the buyer or closing agent with the necessary documentation to show that they are a resident of Hawaii and therefore, exempt from the HARPTA tax.
However, there are exemptions and exceptions to the HARPTA tax. For instance, if the sale price of the property is less than $600,000, and the seller certifies that the home is their primary residence, they are exempt from the HARPTA tax. Additionally, if the seller is a military service member who is transferred out of Hawaii and is required to sell their primary residence, they may be able to claim an exemption from the HARPTA tax.
It's important to note that the HARPTA tax applies to both residential and commercial properties in Hawaii. Even if the property is being sold for the purpose of redevelopment or commercial use, the HARPTA tax will still apply if the seller is a resident alien or U.S. citizen.
It's also important to consult with a tax professional to ensure that you comply with all the tax laws when selling your home in Hawaii. A tax professional can advise you on the best course of action for your specific situation and help you navigate the complex tax implications of selling your property in Hawaii. They can also help you to determine if you qualify for any exemptions or exceptions to the HARPTA tax.
In conclusion, the Hawaii Real Property Tax Act (HARPTA) is a tax law that applies to resident aliens and U.S. citizens who sell real property in Hawaii. The law requires a withholding of 7.5% on the gross proceeds of the sale of the property, which is paid to the state of Hawaii. However, there are exemptions and exceptions to the HARPTA tax, such as if the sale price of the property is less than $600,000, and the seller certifies that the home is their primary residence. It's important to consult with a tax professional to ensure that you comply with all the tax laws when selling your home in Hawaii and to navigate the complex tax implications of selling your property in Hawaii.
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