08-23-2007, 04:57 AM
It's not a tax, it's a tax withholding. The State of Hawaii is making sure you pay yor capital gain taxes! 
C-38 and C-39 of your Purchase Contract includes this provision. Escrow is required to withhold this money and send it to the appropriate authorities after 14 days. Your CPA will need to file a Hawaii tax return on the sale. If your capital gain is more than the withheld 5% than you will have to pay the difference. If it's less than the withheld 5% the State will refund the difference. Since you are a US citizen, C-39 FIRPTA (10%) does not apply to you. However, you will have to go to the US Embassy where you live now and they will have to notarize your deed and escrow papers.
Aloha,
John S. Rabi, ABR,CM,CRB,FHS,RB
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"
C-38 and C-39 of your Purchase Contract includes this provision. Escrow is required to withhold this money and send it to the appropriate authorities after 14 days. Your CPA will need to file a Hawaii tax return on the sale. If your capital gain is more than the withheld 5% than you will have to pay the difference. If it's less than the withheld 5% the State will refund the difference. Since you are a US citizen, C-39 FIRPTA (10%) does not apply to you. However, you will have to go to the US Embassy where you live now and they will have to notarize your deed and escrow papers.Aloha,
John S. Rabi, ABR,CM,CRB,FHS,RB
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"