The Hawaii N-289 form is a certification used to exempt the withholding of tax on the sale of Hawaii real property. This form must be completed by the seller and provided to the buyer to indicate that tax withholding is not necessary under specific conditions. Understanding how to fill out and utilize this form is crucial for both parties involved in the transaction.
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The Hawaii N 289 form plays a crucial role in the real estate transaction process within the state. This certification is specifically designed for sellers, also known as transferors, to inform buyers, or transferees, that withholding tax is not necessary when transferring Hawaii real property. The form serves to clarify the seller's residency status, provide justification for any nonrecognition of gain or loss under federal tax law, and confirm that the property has been used as a principal residence in the year prior to the sale, provided the sale amount does not exceed $300,000. Sellers must complete this form and present it to the buyer without submitting it to the Department of Taxation for approval. The document includes sections for the seller's identification, address, and a declaration affirming the accuracy of the information provided. Misrepresentation on this form can lead to serious legal consequences, emphasizing the importance of honesty and accuracy in its completion. Understanding the nuances of the Hawaii N 289 form is essential for both sellers and buyers to ensure compliance with state tax regulations and to facilitate a smooth transaction.
STATE OF HAWAII — DEPARTMENT OF TAXATION
Form N-289
(REV. 2008)
CERTIFICATION FOR EXEMPTION FROM THE
WITHHOLDING OF TAX ON THE DISPOSITION OF HAWAII
REAL PROPERTY
(To be completed by transferor/seller and given to transferee/buyer. The transferor/seller should NOT file Form N-289 with the Department of Taxation for approval.)
Section 235-68, Hawaii Revised Statutes (HRS), provides that a transferee/buyer of Hawaii real property must withhold tax if the transferor/seller is a non- resident person. To inform the transferee/buyer that withholding of tax is not required upon the disposition of Hawaii real property by
____________________________________________________ (name of transferor/seller), the undersigned hereby certifies the following:
Transferor/seller’s identification number (Last 4 numbers of the SSN or FEIN) _______________________________
Transferor/seller’s address (home address for individuals, office address for corporations, partnerships, trusts, or estates)
The withholding of tax is not required upon the disposition of Hawaii real property because (check whichever box is applicable):
1 The transferor/seller is a resident person as defined in section 235-68, HRS. Resident person means any: (1) Individual included in the definition of “resident” in section 235-1, HRS; (2) Corporation incorporated or granted a certificate of authority under Chapter 414, 414D, or 415A, HRS; (3) Partnership formed or registered under Chapter 425 or 425E*, HRS; (4) Foreign partnership qualified to transact business pursuant to Chapter 425 or 425E*, HRS; (5) Limited liability company formed under Chapter 428, HRS, or any foreign limited liability company registered under Chapter 428, HRS; provided that if a single member limited liability company has not elected to be taxed as a corporation, the single member limited liability company shall be disregarded for purposes of section 235-68, HRS, and section 235-68, HRS, shall be applied as if the sole member is the transferor; (6) Limited liability partnership formed under Chapter 425, HRS; (7) Foreign limited liability partnership qualified to transact business under Chapter 425, HRS; (8) Trust included in the definition of “resident trust” in section 235-1, HRS; or (9) Estate included in the definition of “resident estate” in section 235-1, HRS.
*Note: Chapter 425E, HRS, replaced chapter 425D, HRS, effective July 1, 2004.
2 That by reason of a nonrecognition provision of the Internal Revenue Code as operative under chapter 235, HRS, or the provisions of any United States treaty, the transferor/seller is not required to recognize any gain or loss with respect to the transfer. (See Instructions) (Complete A and B below.)
A. Brief description of the transfer:
B. Brief summary of the law and facts supporting the claim that recognition of gain or loss is not required with respect to the transfer:
3 For the year preceding the date of the transfer the property has been used by the transferor/seller as a principal residence, and that the amount realized for the property does not exceed $300,000. (See Instructions)
____________________________________________________ (name of transferor/seller) understands that this certification may be disclosed to the
State of Hawaii, Department of Taxation by the transferee/buyer and that any false statement contained herein could be punished by fine, imprisonment, or both.
I declare, under the penalties set forth in section 231-36, HRS, that this certification has been examined by me, and to the best of my knowledge and belief, it is true, correct, and complete. In the case of corporations, partnerships, trusts, or estates, I further declare that I have authority to sign this document on behalf of ____________________________________________________ (name of transferor/seller).
Signed:
_______________________________________
Print Name:
________________________________________________
Title:
Date:
INSTRUCTION
FORM N-289
Instructions for Form N-289
CERTIFICATION FOR EXEMPTION FROM THE WITHHOLDING OF TAX ON THE DISPOSITION OF HAWAII REAL PROPERTY
General Instructions
Purpose of Form
Use Form N-289 to inform the transferee/buyer that the with- holding of tax is not required upon the disposition of Hawaii real property if (1) the transferor/seller is a resident person, (2) by reason of a nonrecognition provision of the Internal Revenue Code as operative under chapter 235, HRS, or the provisions of any United States treaty, the transferor/seller is not required to recognize any gain or loss with respect to the transfer, or (3) for the year preceding the date of the transfer the property has been used by the transferor/seller as a principal residence, and that the amount realized for the property does not exceed $300,000.
Who Can Complete Form N-289
The transferor/seller can complete Form N-289.
Where to Send Form N-289
Form N-289 must be completed by the transferor/seller and given to the transferee/buyer. The transferor/seller should NOT file Form N-289 with the Department of Taxation for approval. The transferee/buyer is to retain Form N-289 and NOT forward it to the Department of Taxation if ALL the transferor/sellers have provided a certification of exemption on Form N-289 to the transferee/buyer. If one or more, but not all of the transferor/sell- ers has provided a certification of exemption on Form N-289 to the transferee/buyer, the transferee/buyer shall attach a copy of the Form N-289 to Forms N-288 and N-288A, which must still be filed with the Department of Taxation.
Specific Instructions
At the top of Form N-289, enter the transferor/seller’s name, identification number (last 4 numbers of the social security number, individual identification number or federal I.D. number), and address. The Internal Revenue Service (IRS) issues Indi- vidual Taxpayer Identification Numbers (ITINs) to certain aliens who are required to have a U. S. taxpayer identification number but who do not have, and are not eligible to obtain, a social secu- rity number. The ITIN issued by the IRS must be used as the in- dividual’s identification number. If the individual has applied for an ITIN but the IRS has not yet issued the ITIN, write “Applied For”.
Check the applicable box to indicate the reason the withhold- ing of tax is not required upon the disposition of Hawaii real property.
Box number 1. Check box number 1 if the transferor/seller is a resident person as defined in section 235-68, HRS.
Box number 2. Check box number 2 if by reason of a nonrecognition provision of the Internal Revenue Code as oper- ative under chapter 235, HRS, or the provisions of any United States treaty, the transferor/seller is not required to recognize any gain or loss with respect to the transfer. Complete sections A and B requesting a brief description of the transfer and a brief summary of the law and facts supporting the claim that recogni- tion of gain or loss is not required with respect to the transfer.
NOTE: If the withholding of tax is not required upon the dispo- sition of Hawaii real property because the disposition qualifies for the exclusion of gain from the sale of a principal residence under Internal Revenue Code section 121, check box number 2.
Box number 3. Check box number 3 if for the year preceding the date of the transfer the property has been used by the trans- feror/seller as a principal residence, and the amount realized for the property does not exceed $300,000. The "amount realized" means the sum of the cash paid, or to be paid (not including in- terest or original issue discount), the fair market value of other property transferred or to be transferred, and the amount of any liability assumed by the transferee/buyer or to which the Hawaii real property interest is subject to immediately before and after the transfer. Generally, the amount realized, for purposes of this withholding, is the sales or contract price.
NOTE: Although the withholding of tax may not be required upon the disposition of Hawaii real property, the trans- feror/seller is required under section 235-92, HRS, to file an in- come tax return to report the sale or other disposition.
Signature
Form N-289 must be signed by an individual, a responsible corporate officer, a member or general partner of a partnership, or a trustee, executor, or other fiduciary of a trust or estate. In addition, Form N-289 may be signed by an authorized agent with a power of attorney.
Where to Get Information
Taxpayer Services Branch
P. O. Box 259
Honolulu, HI 96809-0259
Tel. No.: 808-587-4242
Toll Free: 1-800-222-3229
Completing the Hawaii N-289 form is an essential step for sellers of Hawaii real property to certify their exemption from tax withholding. This form must be filled out accurately and provided to the buyer. The seller does not submit this form to the Department of Taxation, but it must be retained by the buyer.
The Hawaii N-289 form is used to inform the buyer (transferee) that tax withholding is not required when a property in Hawaii is sold by the seller (transferor). This exemption applies if the seller is a resident person, if the seller is not required to recognize any gain or loss from the sale due to specific provisions in the tax code, or if the property has been the seller's principal residence and sold for $300,000 or less.
The transferor or seller of the property is responsible for completing the Hawaii N-289 form. This form must then be provided to the buyer, who will keep it for their records.
No, the transferor/seller should not file the Hawaii N-289 form with the Department of Taxation. Instead, it is given directly to the buyer, who retains it unless certain conditions apply.
To complete the form, the transferor/seller must provide their name, identification number (the last four digits of their Social Security Number or Federal Employer Identification Number), and their address. Additionally, they must check the appropriate box indicating why withholding is not required and provide a brief description of the transfer and relevant legal facts if necessary.
Withholding is not required under the following conditions:
The "amount realized" refers to the total cash paid or to be paid for the property, the fair market value of any other property involved in the transaction, and any liabilities assumed by the buyer. It generally reflects the sales price of the property.
Providing false information on the Hawaii N-289 form can lead to serious consequences, including fines and possible imprisonment. It is crucial for the transferor/seller to ensure all information is accurate and truthful.
The form must be signed by the transferor/seller or an authorized representative. This could include a corporate officer, a member or general partner of a partnership, or a trustee or executor of a trust or estate.
The buyer should keep the Hawaii N-289 form for their records. If all sellers provide a certification of exemption, the buyer does not need to submit it to the Department of Taxation. However, if only some sellers provide it, the buyer must attach the form to other required tax forms when filing.
For more information, you can contact the Taxpayer Services Branch of the Hawaii Department of Taxation. They can be reached by mail at P.O. Box 259, Honolulu, HI 96809-0259, or by phone at 808-587-4242 or toll-free at 1-800-222-3229.
Incorrect Identification Number: Many individuals fail to provide the correct last four digits of their Social Security Number (SSN) or Federal Employer Identification Number (FEIN). This can lead to delays or complications in processing.
Missing Signature: Some transferors forget to sign the form. Without a signature, the certification is incomplete and may not be accepted.
Failure to Check Applicable Boxes: Not checking the appropriate box to indicate why withholding is not required can result in confusion. It is crucial to select the correct reason based on the specific situation.
Inaccurate Property Description: Providing an unclear or incorrect description of the property being transferred can lead to misunderstandings. A precise description is essential for clarity.
Omitting the Transferor's Address: Some individuals neglect to include the transferor's address. This information is vital for identification and communication purposes.
Not Following Submission Guidelines: Transferors often mistakenly file the form with the Department of Taxation instead of giving it to the transferee. The form should only be provided to the buyer.
Inadequate Summary of Law and Facts: When completing sections A and B, some fail to provide a thorough summary supporting their claim. This lack of detail can undermine the validity of the exemption.
The Hawaii N-289 form is a crucial document used in real estate transactions to certify that the withholding of tax is not required upon the sale of Hawaii real property. Alongside this form, several other documents may be necessary to ensure compliance with state tax regulations and to facilitate a smooth transaction. Below is a list of additional forms and documents commonly used in conjunction with the Hawaii N-289 form.
Each of these documents plays a significant role in the real estate transaction process in Hawaii. They help ensure compliance with tax regulations, protect the interests of both buyers and sellers, and facilitate a smooth transfer of property ownership. Understanding these forms can help individuals navigate the complexities of real estate transactions more effectively.
The Hawaii N-289 form is similar to the IRS Form 8288-B, which is used for withholding tax on the disposition of U.S. real property interests. Both forms serve to certify that a seller is exempt from withholding tax, thereby alleviating the buyer's obligation to withhold a portion of the sale proceeds. Just as the N-289 requires the seller to provide information about their residency status or other exemptions, Form 8288-B also requires the seller to substantiate their claim for exemption, ensuring that the appropriate tax treatment is applied during the property transfer process.
Another comparable document is the California Form 593-C, which is a Certificate of Exemption from withholding on the sale of California real property. Like the Hawaii N-289, this form is completed by the seller and presented to the buyer to confirm that withholding is not necessary. Both documents require the seller to provide their identification information and specific reasons for claiming an exemption, thus ensuring compliance with state tax laws and protecting the buyer from potential tax liabilities.
The New York State Form IT-2663 is also similar in purpose, as it addresses withholding tax on the sale of real property in New York. This form, like the Hawaii N-289, is used to certify that the seller is exempt from withholding requirements. It requires the seller to provide details about their residency status and the nature of the property transfer. By ensuring that sellers complete and submit the appropriate documentation, both forms help facilitate smooth transactions while adhering to tax regulations.
Lastly, the Florida Form DR-219 serves a similar function by allowing sellers to claim an exemption from withholding tax on the sale of Florida real estate. This form, much like the Hawaii N-289, requires the seller to declare their residency status and provide supporting information. Both documents aim to protect buyers from unnecessary withholding obligations while ensuring that sellers comply with tax regulations related to property transfers.
When filling out the Hawaii N-289 form, it's crucial to follow specific guidelines to ensure accuracy and compliance. Here’s a list of ten things you should and shouldn’t do:
Here are ten misconceptions about the Hawaii N 289 form, along with clarifications to help you understand its purpose and use.
The Hawaii N-289 form is an important document for individuals involved in the sale of real property in Hawaii. Here are key takeaways regarding its use and completion: