It's everyone's favorite time of the year - Tax Season! Ok, perhaps its not the most joyous time of the year but it definitely requires our attention over the next couple of months. The name of the game when it comes to preparing and filing your annual tax returns is to be organized and to gather ALL important and relevant information. Not only will your tax accountant love you but there is also less chance of making errors and have to file an amendment down the road.
My brother and I have worked with hundreds of Hawaii Kai real estate buyers and sellers over the years and I am offering some helpful insight from personal experience. If you have bought or sold Hawaii Kai real estate this past year then chances are your accountant is going to need the information from that Hawaii Kai real estate sale to complete your tax returns. When you closed on your transaction, you should have received a final Hud that provided all of the final figures of the sale. If for some reason you misplaced it, you should contact your Hawaii Kai real estate professional and ask them to obtain a copy for you. If you can't get a hold of your real estate agent, then contact the escrow company that handled your Hawaii Kai real estate transaction and ask them for a copy. They will definitely have it.
Also, keeping a copy of your final HUD is very important if you are an out of state seller and are taking a loss. In Hawaii, when a out of state seller sells their property they have to pay HARPTA. HARPTA is a withholding of 5% of the sales price that goes to the state. This is not an "additional tax" but rather a "withholding". Being an out of sate seller, the state of Hawaii withholds the 5% upfront to ensure that it receives the taxes owed from the sale of the property. When the seller files his taxes at the end of the year, he may either owe more $$ or is due a refund. If a refund is due, the state of Hawaii will deduct what is owed and refund the difference. The reason I have taken the time to explain this is because in today's Hawaii Kai real estate market as everywhere else, there are a lot of short sales. A short sale is when there is more owed on the property then what it will sell for. In 99% of the cases, the seller is taking a loss rather than a gain. If they can prove their loss, then the state of Hawaii may give them an exemption and not require them to pay the 5% HARPTA at closing. The easiest way to qualify for the exemption is to provide a copy of your original final HUD when you purchased the property and the estimated HUD when you are selling the Hawaii Kai property. If a loss is evident, the state of Hawaii will grant your exemption.
I hope this information has been helpful and please feel free to call me at 808.223.8833 if you have any questions or visit my Hawaii Kai real estate website.