State Tax Flashcards
Conveyance Tax
Calculation based on
Property purchase price and
The buyers intended use of. The property
If owner occupied, tax is less than investment.
Hawaii Real Property Tax.Act. (HARPTA)
7.25% must be withheld of sales Regarding non resident of Hawaii
Seller including a partnership or corporation.
Non resident is a party who has not resided in the state for 200 days.
Allows state to collect capital gains tax from absentee owner
HARPTA
The BUYER is responsible to w/hold tax from seller’s proceeds.
The seller may apply for waivers or exemptions w/in 14 days of acceptance of the sales contract which may include:
If seller is a resident person
If Seller is not recognizing any gain or loss like a 1031 exchange. Or For the year preceding date of transfer, property has been used by the seller as the Principal residence and property sold for less than $300,000.00.
The seller owes the tax no later than 20 days after closing of the transaction.
General Excise Tax. (GET)
In Hawaii. It is 4.712%
Transient Accommodation Tax (TAT)
Tax is 10.25%
Roll Back Tax
Tax that is retroactive to the date property was first assessed up to 10 years.
Assessed on the difference between the value for agricultural use and the best use of the property
Federal Tax
Administered by the IRS
Regarding priority of federal tax lien is subordinate to the following — if they were recorded at the Bureau of Conveyances before the federal tax lien was recorded—
A purchaser
A holder of secured interest
A mechanical lien and
A judgement lien creditor
Foreign Investment in Real Property Tax Act (FIRPTA).
Similar to the HARPTA.
Difference is the seller must not only be a non-resident of Hawaii but a foreigner as well.
This tax is addition to the 7.25% HARPTA
IT IS BASED ON SALES PRICE:
Owner occupied by Buyer- $300,000 to $1.000,000. Is 10% > than1,000,000 it is 15%
Investment by Buyer. $300,000 to $1,000,000 is 15% > $1,000,000 it is 15%
Taxpayer’s Relief Act of 1997
For homeowner who has lived in residence 2 out of last 5 years
Amount excluded for single owner: $250,000
Amount excluded if married couple, filing jointly or both names on title: $500,000.
1031 Exchange
Capital Gains is deferred if proceeds from sale are reinvested in an investment
Property. NO GAIN IS REALIZED. It must be like-kind.
The relinquished property sold or the replacement property cannot be used as a personal residence.
An investment property can be exchanged for a property for business purposes but not a personal residence.
1031 Exchange a property must be “like-kind”.
Property must be identified for exchange before closing.
Identify the replacement property (can have up to 3) w/in 45 days of closing.
Acquire the replacement property w/in 180 days of closing
A qualified intermediary must be used to facilitate the transaction
“BOOT” Tax
If value of replaced property is less than sold property, the difference is taxed.
Reverse exchanges: where taxpayer acquires the replacement property before the relinquished property.
Estate Taxes
Presently, there is a $11 million-plus federal exemption per person.
Hawai’i State is considering taxing estates over $10 million- plus.
Federal Reporting Laws. Impact foreign buyers and sellers.
- Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA)
- Bank Secrecy Act of 1970 ( BSA or otherwise known as the Currency and Foreign Transactions Reporting Act)
- International Investment and Trade in Services Survey (IITSS)
American land Title Association (ALTA) with
Financial Crimes Enforcement network (FinCEN) issued the
Geographic Targeting Orders (GTO) which requires
Title insurance underwriters ( including any of their subsidies or agents)
To identify individuals involved in shell cos. & other legal entities that make
All-cash purchases for high end residential real estate in several jurisdictions around the US.
