Who is responsible for withholding taxes on the sale of property owned by a non-resident?

Who is responsible for withholding taxes on the sale of property owned by a non-resident?

• A. The seller.
• B. The buyer.
• C. The escrow company.
• D. The listing broker.

Answer: (B)

The buyer is responsible for withholding taxes on the sale of property owned by a non-resident because of the specific tax regulations that apply to such transactions. When a non-resident sells property in Hawaii, there is a requirement under the Hawaii Revised Statutes for the buyer to withhold a percentage of the gross proceeds to ensure that any potential tax obligations of the seller are addressed. This withholding acts as a prepayment of tax that the non-resident seller may owe on the gain from the sale. Buyers must be especially vigilant in these situations to ensure compliance with the law, which helps to safeguard the state's interest in collecting taxes owed by non-residents. The escrow company may assist in the process but is not ultimately responsible for withholding the taxes. Similarly, while the seller might have tax obligations, it is the buyer who takes on the responsibility for withholding at the time of sale. Therefore, the identification of the buyer as the party responsible reflects the regulatory framework in place for such real estate transactions.

The buyer is responsible for withholding taxes on the sale of property owned by a non-resident because of the specific tax regulations that apply to such transactions. When a non-resident sells property in Hawaii, there is a requirement under the Hawaii Revised Statutes for the buyer to withhold a percentage of the gross proceeds to ensure that any potential tax obligations of the seller are addressed. This withholding acts as a prepayment of tax that the non-resident seller may owe on the gain from the sale.

Buyers must be especially vigilant in these situations to ensure compliance with the law, which helps to safeguard the state's interest in collecting taxes owed by non-residents. The escrow company may assist in the process but is not ultimately responsible for withholding the taxes. Similarly, while the seller might have tax obligations, it is the buyer who takes on the responsibility for withholding at the time of sale. Therefore, the identification of the buyer as the party responsible reflects the regulatory framework in place for such real estate transactions.