August 2019 YTD Maui Real Estate Stats; What is the HARPTA Withholding?

September 16, 2019, 9:56 AM HST · Updated September 16, 9:56 AM
Reta Chin-Chiarella · 1 Comment
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AUGUST 2019 YTD Maui Real Estate Statistics

Median prices for Maui real estate homes, condo and land all increased vs 2018 at $755,000, $515,000 and $500,000, respectively. While home sales on Maui are down 10% for the year, the two districts where sales increased are Upcountry (up 24%) and West Maui (up 2%). Condo sales are also down 6%, but Kīhei (up 7%), Kapalua (up 13%) Lahaina (up 23%) and Pukalani (up 20%) all have more sales vs 2018.

(For a comprehensive statistics report, please click HERE)

What is the HARPTA withholding?

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It is so important for prospective buyers and sellers, who do not reside in the State of Hawaiʻi, to understand the Hawaiʻi Real Property Tax Act (HARPTA) Withholding. The HARPTA withholding requires the buyer who purchases real property from a non-resident of Hawaiʻi to withhold 7.25% of the amount realized (generally the sales price) and remit to the Department of Taxation within 20 days of closing unless an exemption applies. Pursuant to Hawaiʻi Revised Statutes Section 235-68, if a seller is a non-resident person or entity (corporation, partnership, LLC, Trust or Estate) of the State of Hawaiʻi, Buyer must withhold a specific percentage (7.25%) of the “amount realized” by Seller on the sale of the Property and forward the amount with the appropriate form to the State Department of Taxation. Such withholding may not be required if Seller obtains and provides Buyer with an authorized exemption or waiver from withholding.

To better understand this withholding, this is simply what transpired in the past that created this withholding. Second home buyers/investors from the mainland purchased their dream property in Hawaiʻi and when they sold it and made a gain of their sale, they went back to their prospective state and taxes on that gain were paid to their home state. Hawaiʻi implemented this tax act back in the early 1990’s to collect the taxes on the gain of relinquished properties.

In the Hawaiʻi Real Estate Association Standard Purchase Contract, the verbiage includes that if Seller does not provide Buyer with a certificate of exemption or waiver from HAPRTA no later than fourteen (14) days prior to Scheduling Closing Date, the Escrow company is authorized and instructed to withhold/collect from Seller the required amount at closing and forward it to the State Department of Taxation.

*All information deemed reliable but not guaranteed, and should not be relied upon without independent verification. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any misprints, typographical errors, or misinformation and shall be held totally harmless. Listing(s) information is provided by the REALTORS Association of Maui Inc (C) and is for consumer’s personal, non-commercial use. Information on this site was last updated (insert publication date). This is not intended as legal or tax advice, and readers are urged to consult with the appropriate professionals to determine the accuracy of information.

Reta Chin-Chiarella

Reta Chin-Chiarella
AVP, Strategic Business Development
Fidelity National Title & Escrow:

Reta Chin-Chiarella is a contributing writer to Maui Now. Reta’s experience in the Maui escrow/title/real estate industry dates back to 1990. Named Affiliate of the Year by the Realtors Association in 2000 and she’s also been recognized for sales awards in her career. Fidelity National Title is recognized as the leader in the industry, ranked 303 in the Fortune 500. Fidelity is the highest rated and largest title insurance company, underwriting one of three policies, nationwide. One of the offices is located at the Shops at Wailea, at 3750 Wailea Alanui, Suite 22EW in Wailea. You can Follow Reta on IG @RetaChinFidelity.

Offices of Fidelity National Title & Escrow are available in: Kahului (808) 893-0556; Lahaina (808) 661-4960; Upcountry (808) 573-0110; and Wailea (808) 891-2404.

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