I thought that I would take a minute to explain one of the differences between purchasing a property in Hawaii as opposed to elsewhere, the state of Hawaii’s Conveyance Tax.
The State of Hawaii collects a conveyance tax on every real estate transaction that occurs in the state. The Conveyance Tax is paid out of the proceeds of the sale, which effectively means that this tax is charged to the Seller at closing. While many states tax real estate transactions, what is different in Hawaii is that the amount of the tax is dependent on if the Buyer is eligible for a Homeowner’s Exemption. The Homeowner’s Exemption is basically synonymous with claiming a property in Hawaii as one’s principal residence.
The Conveyance Tax Rates are assessed on a sliding scale, beginning at $.10 per $100 of the Purchase Price for a transaction of less than $600,000 for a Hawaii State resident, and $.15 per $100 for non-residents. There are a total of 7 brackets, culminating in a rate of $1.00 for Hawaii Residents for a transaction of $10,000,000 or more and a corresponding rate of $1.25 for a non-resident.
So, a $10,000,000 transaction “costs” a Seller $25,000 more if the Buyer is not a resident of Hawaii, and the total costs to a Seller for this transaction is $125,000. While $25,000 may not seem all that significant in a $10M transaction, it sometimes can be, especially in a multiple offer situation. ~ Johnny Mac Mcelree