How much are Hawaii transfer taxes? | Who pays transfer taxes? | When are transfer taxes paid? | Methodology
Hawaii has a variable transfer tax rate that rises with the price of the home. For a primary residence worth $839,013 — the median home price in the state — the transfer tax due will be $1,678. However, the tax rate is higher for vacation homes and more expensive properties.
The specifics on who pays the transfer tax (also called a conveyance tax in Hawaii) are sometimes up for negotiation, but usually the seller is responsible.
Clever Real Estate can help you cut costs here — our concierge team will partner you with an experienced agent who can help you negotiate a good deal with your buyer on transfer taxes. You'll save big by paying only 1.5% in commission, which is much less than the Hawaii average of 2.45%.
You can't change transfer tax rates. But, an experienced Clever Real Estate agent can help you win the negotiation battle so you aren't stuck paying all of the transfer taxes on your own.
When you choose Clever, you'll work with a full-service realtor with transfer tax expertise in your local market.
Clever's service is totally free, with zero obligation — you can walk away at any time.
Who pays transfer taxes in Hawaii: The buyer or the seller?
In Hawaii, usually, the seller is responsible for paying the transfer tax. This expense can be negotiated between the buyer and seller, however.
When do you pay transfer taxes in Hawaii?
In Hawaii, the transfer tax is taken out of the profit made from the house's sale, usually at closing.
The seller needs to pay any transfer taxes no later than 90 days after closing on the home, otherwise, penalties and interest will be imposed on the transfer tax hiking up costs even more.
How Much Are Transfer Taxes in Hawaii: The buyer or the seller?
Compared to other states, Hawaii's transfer taxes are a little more involved. How much you pay will depend on the purchase price of the home as well as if the buyer qualifies for a homeowner's exemption because the property is their primary residence.
| Home Value | Tax Rate (without exemption) | Tax Rate (with exemption) |
| <$600,000 | 0.15 per $100 (0.15%) | 0.10 per $100 (0.10%) |
| $600,000 - $1,000,000 | 0.25 per $100 (0.25%) | 0.20 per $100 (0.20%) |
| $1,000,000 - $2,000,000 | 0.40 per $100 (0.40%) | 0.30 per $100 (0.30%) |
| $2,000,000 - $4,000,000 | 0.60 per $100 (0.60%) | 0.50 per $100 (0.50%) |
| $4,000,000 - $6,000,000 | 0.85 per $100 (0.85%) | 0.70 per $100 (0.70%) |
| $6,000,000 - $10,000,000 | 1.10 per $100 (1.10%) | 0.90 per $100 (0.90%) |
| $10,000,000+ | 1.25 per $100 (1.25%) | 1.00 per $100 (1.00%) |
The homeowner's exemption was initially created to help provide some tax relief and to also encourage residents to settle down in Hawaii. It rewards those who choose to make Hawaii their principal home, helping to grow and contribute to the state's economy.
Of course, because Hawaii is an incredible vacation hotspot, many who sell or purchase homes may simply only be there for a few months out of the year and then hop back to the continental U.S. during the rest of the year.
So how do you qualify for a homeowner's exemption?
In order to get this tax break, you must own and occupy the property as your primary home, meaning you must live there for 270 days out of the year.
Additionally, you also must record your home ownership at the Bureau of Conveyances, State Department of Land and Natural Resources, in Honolulu, as well as file a claim form for the Homeowner's Exemption.
If you meet these criteria, you could save thousands on transfer taxes down the road.
For instance, since Hawaii's transfer taxes are applied on a sliding scale based on the purchase price of the home, at the low end of the spectrum, with a home less than $600,000, you'll pay $0.10 per $100 of the purchase price if the buyer qualifies for a Homeowner's Exemption.
However, if the buyer doesn't qualify for a Homeowner's Exemption, with a home sold at less than $600,000, you'll be subject to pay a transfer tax rate of $0.15 per $100 of the purchase price.
Hawaii's transfer tax scale goes all the way up to homes purchased at $10,000,000 or more where you'll pay $1 per $100 of the purchase price with a Homeowner's Exemption and $1.25 per $100 of the purchase price if the buyer does not qualify for an exemption.
Can You Deduct Transfer Taxes?
Unfortunately, no matter what state you live in, you cannot deduct transfer taxes as they are essentially a transaction fee to legally transfer the title of a property from one party to another.
However, you can still use transfer taxes to your advantage and help reduce your tax exposure down the road when it comes to capital gains tax.
To do this, you can include transfer taxes as part of the cost basis of your home, meaning you add the amount in transfer taxes to the original cost of the home.
The advantage here is that when you sell, your total gain on the home will be less, helping to offset and reduce the total amount you'll be taxed on the capital gains tax.
Other Considerations
When buying or selling a home, you should expect to pay any transfer tax fees as part of the closing costs.
During closing, there's always added costs and fees for both buyer and seller, and while you can negotiate who pays, you'll want to make sure you budget properly so you can cover both transfer taxes and any additional closing costs.
Sellers — especially in Hawaii where the seller pays the transfer tax — should also keep in mind another cost-saving move could be to alter the initial asking price of their home.
For instance, if your asking price is $600,000, in Hawaii, that puts you into a higher transfer tax bracket. By lowering your asking price to $599,000, you would drop into a lower transfer tax bracket and save money down the line when paying your transfer tax.
Whether you're selling or buying your home, it's best to partner with a local and experienced real estate agent who can help guide you through the complexities of real estate taxes and transactions.
We’ll partner you with a local real estate agent who knows how to deal with the state’s tax and helps negotiate a deal in your favor. What’s more, our agents charge only a 1.5% listing fee compared to the state average of 2.45%! The money you'll save can more than offset the cost of the transfer taxes.
» SAVE: Learn more about how a Clever agent can help you navigate Hawaii transfer taxes
Methodology
- Transfer tax amounts are based on government website information as of February 2024.
- We gathered our listing commission rate data from a December 2023 survey of 630 of our partner agents.
- Home values, list prices, and sale prices are based on Zillow data as of January 2024.
