As with selling a home on the mainland, and like many metro areas on the mainland, all member of the Honolulu Board of Realtors abide by the rules and regulations of National Association of Realtors regarding standards of conduct and a code of ethics. The Honolulu Board of Realtors also has an MLS called HiCentral, a public website, and it pushes its MLS data to outside aggregators such as Realtor.com, Zillow, and Trulia.
The Honolulu Board of Realtors subscribes to the data sharing agreements IDX and VOW, which allow board members to download MLS data for display on their individual company and agent websites providing, however, they abide by the display rules. Berkshire Hathaway HomeServices Hawaii Realty has access to the MLS data for use by all of its clients and customers. Most member of the MLS are members of the Honolulu Board of Realtors. Thus, actual process of selling is generally similar to what sellers on the mainland have experienced.
The following are areas unique to Hawaii.
Sellers Real Property Disclosure Form (SRPDS)
Hawaii is an Escrow state where by Escrow is an impartial third party that handles the closing of a real estate transaction. The Escrow Officer acts as the intermediary between the buyer(s) and sellers(s) and collects the funds and documents for handling as instructed. A transfer of title to the property generally occurs when a conveyance document is recorded at the State of Hawaii Bureau of Conveyances. The buyer(s) do not pay the seller directly because the funds have to be deposited in advance of the recording. Instead, the buyer(s) deposits funds with the escrow company and the funds are to be paid to the seller once all conditions for the sale have been met and after agreed upon costs are paid.
Hawaii Real Property Tax Act seeks to ensure that non-residents - individuals or entities – report and pay capital gains tax when they sell Hawaii real estate. As a general rule, every transfer of real property must withhold (5) percent of the “amount realized” general eh sales price and transmit that amount to the State Tax Department within 20 days after closing unless an exemption applies. Generally speaking, there are several exemptions but Sellers are urged to check with their accountants to determine their actual exemption from this withholding. It is the Seller’s responsibility to provide proof that the Seller has an exemption. The definition of a Hawaii Resident is defined in the Hawaii Revised Statutes (HRS) 235-1.
Broadly speaking the exemptions are (Sellers are urged to seek professional accounting advice to determine if they qualify for an exemption and what forms need to be competed and submitted):
- Seller is a 1031 exchange
- Seller is selling at a loss
- Sales price was under $300,000 and was used as a principal residence
The Foreign Investment in Real Property Tax Act is part of the Internal Revenue Code 1445 and seeks to ensure that foreign persons- individuals and entities – report and pay applicable capital gains tax when they sell US real estate. As a rule generally, every transfer of real property must withhold 15 percent of the “amount realized” general the sales price and transmit that amount to the Internal Revenue Service within 20 days after closing unless an exemption applies. Generally speaking, there are no exemptions but Sellers withholding can be reduced depending on the purchase price of the property and whether the Buyer will be an owner occupant but Sellers are urged to check with their accountants to determine their actual withholding percentage.