Hawaii has the reputation of being a "tax hell". Sometimes it's deserved. We have a relatively high income tax rates, and the upper marginal rates tend to kick in at a lower income than in many other states. This means that the middle class carries a big burden of the tax debt.
Also, general excise tax (GET), and for real estate owners renting on a short-term basis, transient accommodations tax are very high, and the base for GET is broad. Even though some see our 4.712% (Oahu rate), and think it's low compared to places around the country where sales tax is much lower, GET is assessed on nearly every product and service sold, and it also hits just about every party in the distribution chain.
In some ways, though, it's a little bit of an unfair label. Our property tax rates on a per $1,000 valuation rate are some of the lowest in the country. This is one reason why people from around the world seem to find Hawaii rental real estate so enticing - the carrying costs are lower than in many other parts of the country.
Another way it's a little unfair is HARPTA. It's actually a little bit of a mixed bag. First, Hawaii isn't the only state that withholds funds from the sale of real estate. 15 other states do as well. However the downside is, at 7.25% (starting 9/16/18) is high, and it's even worse considering Hawaii assesses this on the gross sales price. Several other states let sellers do an estimated calculation on the gain and withhold based on the estimate.
If you want to talk about HARPTA, please call Brad at 808-737-4412.