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Updated: Jan 13, 2020

If you are a non-resident of Hawaii, you will need to pay withholding of HARPTA on the sale price of your home. The State of Hawaii Department of Taxation has announced that the rate will increase from 5% to 7.25% of the sales price for the withholding of tax on the sale of Hawaii properties by non-Hawaii resident persons/entities on or after September 15, 2018.  This withholding is commonly known as “HARPTA”.  Its not a tax on the sale but the amount withheld from the seller’s proceeds from which a possible tax due.

And if you are foreign buyer, you will also need to pay FIRTPA withholding when you sold your house.

The increase was anticipated since the Federal government increased “FIRPTA” (withholding for foreign sellers) from 10% to 15% effective for closings on or after February 16, 2016.

So a total of 15+7.25= 22.25% of the Sale Value will be withheld if the buyer is a foreigner and out of state.

Upon closing of your real estate property, if your selling proceeds is under either HARPTA OR FIRPTA or both, you will need to get the N288 form from escrow upon closing for your tax reporting purpose in order to get the overpayment portion back.

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