HARPTA- this is not a tax this is a withholding.
Who is required to collect and remit 7.25% of the gross sales price at closing to the Hawaii State tax payers office?
- The buyer
- Under HARPTA (section 235-68, Hawaii Revised Statutes (HRS)), every buyer is required to withhold and pay to the Department of Taxation (Department) 7.25% of the amount realized on the disposition of Hawaii real property.
Can you avoid HARPTA taxes?
EXEMPTIONS ARE AVAILABLE IF YOU QUALIFY
If you can prove that no capital gains tax will be due on the transaction, the state will grant a waiver which exempts you from HARPTA withholding.
More Information on the HARPTA Withholding
- HARPTA is like a “deposit” or a “retainer” to make sure you file and pay the required Hawaii Income, General Excise, and Transient Accommodations Taxes, as applicable.
- The amount withheld is designed to be only a rough estimate and may not be anywhere near your actual tax liability.
- If you have no gain at all on your Hawaii property sale, for example, and you are current on your GE and TA taxes you might get ALL of these withholding back as a refund.
- If you DO owe capital gains, General Excise, and/or Transient Accommodations taxes, then it is possible that you might actually owe MORE tax than the amount withheld.