"They're holding my money hostage!"
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  • Writer's pictureBrad Konishi, CPA

"They're holding my money hostage!"

Updated: Jun 9, 2019



Sometimes I hear stories from people who have tried to get a HARPTA waiver or refund by doing it themselves.


Or they tried working with a tax professional who is not experienced with HARPTA. I had a story just like this just recently.


My soon-to-be client lived on the mainland and owned a rental home in Hawaii.


His tax returns were prepared by a CPA in California. He was reporting his rental income to the state, but he wasn't aware that Hawaii also assesses general excise tax - a tax of 4.5% of the gross rental income (income before expenses).


He had sold his home in Hawaii in 2017 and had HARPTA withheld, but when he filed his 2017 Hawaii tax returns which reported the home sale, the tax agents at the State Department of Tax reviewed his file and saw that he did not pay his general excise taxes.


As a general rule, whenever a taxpayer has a very large refund, which occurs whenever there's a HARPTA withholding, the state will carefully review the filing before issuing the refund.


He was looking forward to receiving a big refund, but all he received was a letter informing him that the State would not issue his refund until he paid all of his general excise taxes.


He contacted his real estate agent in Hawaii, who referred him to me. When he called, the first thing he told me is "I need your help. The state is holding my HARPTA money hostage."


He explained his situation and I knew immediately that I could help him. Luckily, he had only been renting out his home for a little over 2 years, so he didn't have a whole lot to pay.


Still, it was necessary for him to file and pay it or he'd never get any part of the $40,000 in HARPTA withholding he had coming back to him.


Because his CPA in California was unfamiliar with Hawaii tax rules, he was happy to let me take care of his client.


We got him caught up, and he should be receiving a hefty refund any day.


Contact us today or call 808-737-4412 if you are facing HARPTA and FIRPTA issues as a non-resident Hawaii home seller. We can probably help you, too!

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