Hawaii's HARPTA (Hawaii Real Property Tax Act) requires:
Correct Answer
B) Buyers to withhold a percentage of the purchase price from non-resident sellers as a Hawaii state income tax withholding
Under HRS §235-68, HARPTA requires buyers to withhold a portion of the purchase price from non-resident sellers as a prepayment of Hawaii state income tax on any gain from the sale. The withholding rate is currently 7.25% of the sales price for individuals and 4% for C-corporations, though rates are subject to legislative change. Non-resident sellers may apply to the Hawaii Department of Taxation for a certificate to reduce or eliminate withholding if the actual tax liability will be less. HARPTA is modeled after the federal FIRPTA but applies to Hawaii state tax obligations.
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