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  • Writer's pictureBrad Konishi, CPA

Are you a Hawaii Landlord? Please read this!

If you operate a rental in Hawaii, it's important to know that you are required to file a Hawaii income tax. If you are a non-resident or part year resident, the proper income tax form to file is an N-15 "Individual Income Tax Return NONRESIDENT and PART-YEAR RESIDENT". The instructions for the N-15 say the following under the section "Who Must File":

Every individual doing business in Hawaii during the taxable year must fi le a return, whether or not the individual derives any taxable income from that business. “Doing business” includes all activities engaged in or caused to be engaged in with the object of gain or economic benefit, direct or indirect, except personal services performed as an employee under the direction and control of an employer. For example, every person receiving rents from property owned in Hawaii is “doing business” and must file a return whether or not the person’s expenses exceed the gross rental income.

The reason why I'm bringing this is up is that whenever we help a home seller file for a HARPTA waiver, reduction, or early tentative refund, we do everything we can to ensure that there are no obstacles in the way. The main reason why Hawaii enacted HARPTA laws in the first place is that they wanted to ensure that non-resident home sellers are current with all of their tax filings and payments before leaving. Even if your rental had losses, you are still required to report the income/expenses on a Hawaii tax return.

If you have been operating a rental in Hawaii, but haven't filed any Form N-15s to report your rental activity to the State of Hawaii, we usually recommend that the taxpayer visit the person who originally prepared their federal return, because they have nearly all of your information already on file, and it will probably be the least expensive for you to go through them. And if you have been reporting rental losses on your federal returns, it's very likely that you won't have to pay any income tax to Hawaii for those years.

So if you operated a Hawaii rental, and you're planning to file for a HARPTA waiver, reduction or early refund, be sure to file your Hawaii income taxes as soon as possible!

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