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New Hawaii Real Property Conveyance Tax PDF Print E-mail

Leave it to our elected officals to further complicate the tax laws in Hawaii. Beginning July 1, 2009, the conveyance tax paid by Sellers of Hawaii real estate shall be changed once again.

As recently as 2005, the conveyance tax was a simple 10 cents per $100 of sales price. Easy, right? Fast forward to June 2007, when Hawaii decided that Sellers of real estate purchased by Buyers who were not going to use the home as their primary residence would pay a higher conveyance tax...and the higher the sales price, the higher the tax rate! Six separate categories of tax rates were created, depending on the purchase price and the Buyer's intention (occupant vs. investor).

Effective July 1, 2009, there will now be fourteen different categories in the Conveyance Tax matrix. The tax is still on a graduated scale, with the same two factors (price & Buyer's intention), however the higher consideration amounts have now been recategorized.

Residential properties (Single Family Residential & Condos only) closing at $1M+ with an investor buyer (not intending to use a primary residence) will be affected by this latest change.

Here are some questions that may arise when looking at these new changes:

Vacant Land: I am selling vacant land that is zoned residential. Which scale is used for this property?

County home exemption is not applicable for vacant land. Therefore, the land is assessed by the graduated scale #1.

Commercial: We have a $1.5 million transaction for a commercial building. The property is classified as industrial. Which scale is to be used - 30¢ per $100 or 40¢ per $100?

This is not a residential condo or single-family property. Therefore, use graduated scale #1.

Trusts: We are taking title to a single-family home in ourtrust; are we automatically subject to the higher rate even though we intend to use the property as our principal residence? We were told that corporations, partnerships, LLCs and LLPs
were automatically subject to the higher rate since they cannot be considered owner/occupants.

The entity clause only applies to corporations, partnerships, LLCs, LLPs, and investment trusts, such as a pension fund trust. If your buyers are the settlors and trustees of their owns trusts which will hold title to the home, then they may qualify for a homeowner’s exemption and graduated scale #1 would apply.

For any questions about Hawaii real estate and property tax-related matters, please contact Gary Petrison, PB at Island Trust Properties: 808-333-7868, This e-mail address is being protected from spambots. You need JavaScript enabled to view it   


 

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