HARPTA
We have helped hundreds of sellers reduce/waive HARPTA at closing and obtain their HARPTA withholdings soon after closing.
- Certificate to waive HARPTA withholding at closing
- Certificate to reduce HARPTA withholding at closing
- Apply for an early HARPTA refund after closing
The Hawaii Real Property Tax Act (HARPTA) requires all sellers of Hawaii property who are NOT residents of Hawaii (non-resident), to have 7.25% of their gross sales price withheld and remitted to the state. HARPTA presumes every seller is a non-resident and the full 7.25% will be withheld unless proof it provided, of either:
- Hawaii Resident Certification (N-289)
Application for Withholding Certificate for Dispositions by Nonresident Persons of Hawaii Real Property Interest (N-288B)
Hawaii enacted the Hawaii Real Property Tax Act to ensure they receive any taxes owed on your sale. It can be a huge surprise to non-resident sellers. The withholding is based on the gross sales price, not the net sales proceeds or gains. As an example, on a $1million home sale you would receive $72,500 less in net cash proceeds.
If HARPTA is withheld, sellers may receive back some of the withholdings depending on their tax calculations:
- Application for Tentative Refund of Withholding on Dispositions by Nonresident Persons of Hawaii Real Property Interests (N-288C) prior to the end of the calendar year of sale
- Hawaii Individual Income Tax Return for the year of sale, subject to limitations on the filing timeline
Hawaii income tax return for the year of sale is required even if an above certification and/or application was also filed.
HARPTA - Q&A
Question: What is HARPTA?
Answer: HARPTA stands for the Hawaii Real Property Tax Act. It requires sellers who are not Hawaii residents to have taxes withheld and remitted to the state of Hawaii within 20 days after the sale of a Hawaii real property interest, except in limited circumstances.
Question: How much is required to be withheld at closing?
Question: Who is responsible to withhold HARPTA?
Question: When is HARPTA not required to be withheld?
Question: Who is NOT a Hawaii resident?
Question: If I (seller) am in the military and being ordered out of Hawaii, does the buyer still have to withhold HARPTA from my sales proceeds?
Question: I am not making any profit from the sale, does the buyer still have to withhold HARPTA from my sales proceeds?
Question: My property was obtained through (1) Inheritance (2) Community Property (3) Gift (4) 1031 exchange. What to do?
Question: Where can I find more information on HARPTA?
Answer: Please give us a call or email to discuss your unique situation, whether HARPTA applies, and your options as a seller to waive, reduce or receive back as quickly as possible any HARPTA withholding requirements. Although not recommended due to the short timeframe to file a waiver or reduction before closing and receiving back an early refund, if you would like to file a form N-288B and/or N-288C please refer to the department of tax forms.