Frequently asked questions
Do I qualify to receive a waiver of HARPTA?
There are a few ways to get HARPTA waived. The most common way is if you are a Hawaii resident and you report it as such to your escrow company via an N-289 ( if you are not a Hawaii resident, see note below).
Also common - if you are doing a 1031 exchange, or you are a nonresident who has lived in the home for at least the previous year and the sale amount is less than $300,000.
If that doesn't apply, you can apply for a HARPTA waiver if you have a tax loss. See the pinned blog post to see if you may have a tax loss (https://www.harpta.com/blog). Contact us at 808-737-4412 if you'd like to discuss and ask questions.
If you are a nonresident with a gain on your sale and are being asked to bring cash to closing, we may be able to reduce your HARPTA so that you won't have to bring any cash to closing. Contact us to ask how we can assist.
Note: If you are not a Hawaii resident but report that you are a resident, please know that this could be considered to be a class C felony. Given the dollar amounts involved, it is something the State of Hawaii works vigorously to enforce.
If I am a military servicemember who is being transferred away from Hawaii (PCS'ed), do I get an automatic waiver of HARPTA?
No, but that doesn't mean you'll always have HARPTA withheld - it just means it may take a little more work to get your through this process.
If you have declared Hawaii as your state of residency (which means you should have been paying Hawaii income tax on your military income), then it may be possible to declare that you are a resident via Form N-289 which you will receive from escrow. In order to declare yourself a resident, you must conform to HRS Section 235-1.
If you aren't a Hawaii resident, but have lived in your home as your principal residence for the last year, and the sale is less than $300,000, then you can also inform your escrow company via Form N-289.
However, if neither of the previous situations applies to you, we can still assist you in applying for a HARPTA waiver. There are specific provisions in the U.S. Federal tax code that may allow you to have HARPTA waived.
The application, if approved, will allow you to have nothing withheld for HARPTA, whether you have a gain (within certain federal limits) or a loss!
And even if there's no way to get a HARPTA waiver before closing, we can always assist you to get an early, tentative refund after closing. Your refund typically takes about 2 months to arrive after filing.
Contact us today to discuss the specifics.
Who is responsible for collecting HARPTA?
The property buyer is responsible for collecting HARPTA. Even though your escrow company handles the paperwork and mails the HARPTA funds to the State Department of Tax, it's ultimately the buyer's responsibility to withhold.
However, if the state finds that HARPTA wasn't withheld when it should have been, the seller, the seller's agent, the buyer, or the buyer's agent could be held responsible for covering the uncollected amounts.
I'm not in Hawaii, and I won't be in the state any time soon. Can I still work with you on my HARPTA/FIRPTA issues?
Yes, that's fine - we haven't even seen at least 75% of our HARPTA clients face-to-face! All of our work can be done remotely via telephone, email, regular mail, fax, or secure file sharing like DropBox. If you have an iPhone or iPad, you can even call us at 808-721-2238 to FaceTime!
We invoice our clients via email, and you can follow a link to pay with a debit or credit card, or you may print out the invoice and mail us a check.
Do you only serve clients selling homes on Oahu or do you help sellers on Kauai, Maui, The Big Island, and Molokai?
HARPTA rules apply statewide and we service owners with home sales on any island.
I already have a tax professional who does my annual tax filings. Why should I work with you?
If you are working with a tax professional you trust, great! We can't stress enough how having a good working relationship with your tax professional is important to your financial future.
However, HARPTA filings aren't like your typical annual tax filings for a number of reasons:
Although some of the rules governing HARPTA tax filings mirror federal rules, there are a number of key differences. We have the necessary experience to account for the differences.
Because of the dollar amounts involved, HARPTA filings are reviewed individually by the most experienced agents at the State Department of Tax. We have learned from over a decade of experience exactly what it is they're looking for when they review a filing.
The amount of HARPTA filings that are rejected from tax preparers who aren't familiar with HARPTA filings (even tax preparers in Hawaii) is very high. And when applying for a HARPTA waiver, the deadline is dictated by the date of your sale closing, so the seller only has one shot to get it done right. We know how to do it right.
