What is Conveyance Tax?
Conveyance tax in Hawaii is a tax imposed on the transfer of real property from one party to another. It is also commonly referred to as "documentary conveyance tax" or "real property conveyance tax." The conveyance tax is assessed based on the consideration (i.e., the sale price or value) of the property being transferred, and it is typically calculated as a percentage of the consideration.
In Hawaii, the conveyance tax is governed by Chapter 247 of the Hawaii Revised Statutes (HRS), which sets forth the rates and exemptions for the tax. The current conveyance tax rates in Hawaii are as follows:
For transfers with a consideration of $600,000 or less: 0.1% (or $1 per $1,000 of consideration)
For transfers with a consideration over $600,000 and up to $1 million: 0.15% (or $1.50 per $1,000 of consideration)
For transfers with a consideration over $1 million: 0.25% (or $2.50 per $1,000 of consideration)
Note that the conveyance tax rates in Hawaii are subject to change, so it is advisable to check the most current rates at the time of the property transfer.
There are certain exemptions and reductions available for the conveyance tax in Hawaii. For example, transfers of real property between spouses, transfers to or from the State of Hawaii or its instrumentalities, and transfers to a nonprofit organization for religious, educational, or charitable purposes may be exempt from conveyance tax. Additionally, there are special rates and exemptions for affordable housing, agriculture, and certain affordable rental housing projects.
It's important to note that the responsibility for paying the conveyance tax in Hawaii is typically negotiated and agreed upon between the parties involved in the property transfer, although the ultimate responsibility for paying the tax rests with the grantor (seller) unless otherwise agreed upon in writing. It is advisable to consult with a qualified attorney or a professional tax advisor in Hawaii to understand the specific requirements and implications of the conveyance tax in your particular situation.