Brad Konishi, CPA
Is my Trust or Estate a Hawaii Resident?
Hawaii residents are essentially excluded from HARPTA requirements. Though HARPTA technically applies to all sellers of real property here, Hawaii residents are able to get an immediate exclusion by claiming their residency. The State of Hawaii has even issued a Tax Information Release that explains residency requirements for individuals ( http://files.hawaii.gov/tax/legal/tir/1990_09/tir97-1.pdf )
However, real estate is not always owned by individuals. When a home is owned by a trust or estate, how do we determine whether or not HARPTA applies? The quick answer is that the residency of a trust or estate is determined mainly by Hawaii Administrative Rules section 18-235-1.16 and 1.17, which defines resident (or nonresident) trusts and estates this way (bolding is mine):
§18-235-1.16 “Resident estate”, defined. “Resident estate” means the same as in section 235- 1, HRS. The estate of a decedent who was a resident at the time of death is a resident estate if a Hawaii court appoints a personal representative or administrator to carry on and who does carry on the principal or an ancillary administration of the estate. [Eff 2/16/82; am 9/3/94; am and ren §18-235-1.16 8/28/98] (Auth: HRS §§231-3(9), 235-118) (Imp: HRS §§235-1)
§18-235-1.17 “Resident trust”, defined. “Resident trust” means the same as in section 235-1, HRS. (1) If the administration of the trust is carried on wholly in the State the trust shall be deemed a resident trust irrespective of the place of residence of the fiduciary or fiduciaries. (2) If the sole fiduciary, or all of the fiduciaries if more than one, are residents, domestic corporations, or partnerships formed under Hawaii law, the trust shall be deemed a resident trust irrespective of the place where the trust is administered. (3) If the administration of the trust is partly carried on in the State, the trust shall be deemed to be a resident trust if one-half or more of the fiduciaries are residents, domestic corporations, or partnerships formed under Hawaii law. [Eff 2/16/82; am 9/3/94; am and ren §18-235-1.17 8/28/98] (Auth: HRS §§231-3(9), 235-118) (Imp: HRS §§235-1)
I hope this helped you. If you have any questions at all about HARPTA or FIRPTA, please call us at 808-737-4412 between 8am to 5pm,