HARPTA stands for the Hawaii Real Property Tax Act
FIRPTA stands for the Foreign Investment in Real Property Tax Act
HARPTA, is an acronym for “Hawaii Real Property Tax Act”. This is a Hawaii State law that requires a withholding of 7.25% of the sales price. (UPDATED! increased from 5% as of 2018) 7.25% of the sales price, not 7.25% of the gains realized. This is 7.25% of the sales price from the seller when the seller is an out-of-State resident. When the seller is not a resident of Hawaii. When the seller is an out-of-State resident. Now, there are some definitions on who is a Hawaii resident and who is a non-Hawaii resident, or an out-of-State resident, I should say. We can take a look at that at another time. Sellers may recoup some of the withholdings beyond the applicable capital gains tax by filing the appropriate form.
FIRPTA, which is an acronym for “Foreign Investment in Real Property Tax Act”. That’s a federal law that requires a withholding of now 15% (UPDATED! increased from 10% as of 2/16/2016) of the sales price. Not 15% of the gains realized, but 15% of the sales price from the seller when the seller is an out-of-the-country resident. Now, you understand, if the seller is an out-of-the-country resident, and he’s not only out of the country, he’s also out of the state, so for somebody out of the country HARPTA and FIRPTA applies. So that’s 7.25% HARPTA withholdings plus 15% FIRPTA withholdings of the sales price.