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Many Buyers and Sellers of Maui Real Estate participate in 1031 Exchanges. A 1031 tax deferred exchange allows the capital gain of a property to be defferred when the net proceeds are reinvested in properties meeting the guidelines.
Sellers of Hawaiian property that are non-Hawaii residents (either US or Foreign) are subject to the HARPTA withholding to pay the capital gains tax on the sale. Additionally, foreign owners are subject to the FIRPTA withholding, which is imposed by the federal government to ensure taxes on the capital gains are collected. Enacting 1031 exchange can provide an exemption of these withholdings.
You will want to consult with your tax advisors to determine whether enacting a 1031 tax deferred exchange is in your best interest.
Additionally, it can be helpful to interview 1031 Exchange Accommodators.
The 1031 Exchange brochure above was provided courtesy of Julie Tumbaga from Old Republic Exchange Company