In order to promote a great level of compliance by non Hawaii residents regarding the reporting of income from sales of real estate located In hawaii, Section 235-68, Hawaii Revised Statutes requires every buyer of Hawaii real estate to deduct, withhold, and pay to the Hawaii Deparment of Taxation 5% of the amount realized by the seller of Hawaii real estate.
Escrow normally assists buyers and sellers in putting this into effect by providing the necessary documentation and ensuring that any amounts that should be paid over are in fact, paid over.
This is done unless there are certain exemptions which apply.
Forms N288 and N288A are used to report and transmit the amount/s withheld within 20 days of escrow closing unless the exemptions apply.
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