For Sellers who do not live in the State of Hawaii and/or in the United States

  • The Governments want you to pay your Capital Gains Taxes and the State of Hawaii wants you to pay your GET and TAT Taxes.
  • Though the Law makes the Buyer carry the burden of withholding the taxes (as an employer does) and pay them to the governments, as a practical matter the Escrow Company does it on behalf of the Buyer.

So the following are the applicable provisions that you will see in any standard sales contract.

Transactions Involving Foreign or Non-Resident Buyer and Seller

C-38 HARPTA Withholding Required if Seller is a Non-Resident of the State of Hawaii. Under Hawaii law, if Seller is a non-resident person or entity (corporation, partnership, trust, or estate) of the State of Hawaii, Buyer must withhold a specified percentage of the “amount realized” by Seller on the sale of the Property and forward the amount with the appropriate form to the State Department of Taxation. Such withholding may not be required if Seller obtains and provides Buyer with an authorized exemption or waiver from withholding. If Seller does not provide Buyer with a certificate of exemption or waiver from HARPTA within fourteen (14) days of the Acceptance Date, Escrow is hereby authorized and instructed to withhold/collect from Seller the required amount at closing and forward it to the State Department of Taxation.

Transactions Involving Foreign or Non-Resident Buyer and Seller

C-39 FIRPTA Withholding Required if Seller is a Foreign Person. Under the Internal Revenue Code, if Seller is a foreign person or entity (non-resident alien, corporation, partnership, trust, or estate), Buyer must generally withhold a specified percentage of the “amount realized” by Seller on the sale of the Property and forward this amount with the appropriate Internal Revenue Service (“IRS”) form. Such withholding may not be required if Seller obtains and provides Buyer with an authorized exemption or waiver from withholding. If Seller does not provide Buyer with a certificate of exemption or waiver from FIRPTA within fourteen (14) days of Acceptance Date, Escrow is hereby authorized and instructed to withhold/collect from Seller the required amount at closing and forward it to the IRS.

C-40 Additional Disclosures Required by Foreign Buyers and Sellers. Buyer and Seller understand that under statutes and ordinances such as the Agricultural Foreign Investment Disclosure Act of 1978, the International Investment and Trade in Services Survey Act, and the revised Ordinances of the City and County of Honolulu, among others, disclosures are required by foreign Buyers and/or Sellers under certain conditions.

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