Harpta.com

Escrow provides their own form to the seller requiring the seller to state their residency status. It is at this time that many non-residents first learn that they are subject to HARPTA withholding. What a shock! Unless you qualify for an exemption there are no other forms that you will provide to escrow, but escrow will prepare the following forms:

Here are the forms that get filed if you DON’T qualify for a waiver or exemption:

1. N-288 Hawaii Withholding Tax Return for Dispositions by Nonresident Persons of Hawaii Real Property Interests.
This form is prepared by escrow on behalf of the buyer for remitting the HARPTA withholding to the State of Hawaii. This form summarizes the number of N-288A forms that accompany N-288 and the amount withheld.

2. N-288A Statement of Withholding on Dispositions by Nonresident Persons of Hawaii Real Property Interests.
This form provides information to the State of Hawaii about the transaction and it is on this form that the State of Hawaii gets the information to record the amount of HARPTA withheld on behalf of the seller. Both N-288 and N-288A forms need to be sent to the State of Hawaii within 20 days of the close of escrow.

HINT: If you intend to file for a refund of overpaid HARPTA on form N-288C you need to insist that escrow remit the HARPTA to the State immediately upon the close of escrow. (they don’t always do this immediately) You will receive a receipt from the State of Hawaii once they receive the HARPTA remittance and you should not file N-288C prior to receiving the receipt from the State of Hawaii. To file prior to the State acknowledging receipt of your HARPTA withholding may cause a delay in receiving your refund.

Here are the forms that get filed if you DO qualify for a waiver or exemption:

1. N-289 Certification for Exemption from the Withholding of Tax on the Dispostion of Hawaii Real Property.
If you qualify for an exemption from withholding you will be asked by escrow to submit this form. If you qualify because you are doing a 1031 exchange, you will check off box 2. Question 2A “Brief description of the transfer:” is answered: “I am doing a 1031 exchange.” Question 2B “Brief summary of the law and facts supporting the claim…” is answered: “Section 1031 of the Internal Revenue Code.”

2. N-288B Application for Withholding Certificate for Dispositions by Nonresident Persons of Hawaii Real Property Interest.
This form is filed with the State of Hawaii well in advance of the close of escrow to receive a waiver of withholding that if approved, you provide to escrow prior to the close of escrow. You file this form if you can prove that you will not realize a gain on the sale, or if there will be insufficient proceeds to pay the withholding required. If you file N-288B because you have a loss on the sale, you will need to provide documentation such as the purchase escrow statement, copies of the actual receipts for all improvements, and a statement from the sale escrow showing the sales price and the estimate of the closing expenses.
Note: you can not include prior year rental loss carryovers as part of your calculation on form N-288B. The rental loss carryovers can only be reported at the end of the year on form N-15.