Need advice regarding Hawaii deed transfer

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We are currently in the process of closing on a Kona Coast II purchase. We have already completed transfer paperwork, which was notarized and forwarded along with the eBay auction price and closing costs to Resort Closings, Inc. Today we received a Hawaii Withholding Tax Return for Dispositions by Nonresident Persons of Hawaii Real Property Interests N-288. We are being asked to sign this form. The amount withheld, $207.50 is 5% of the transfer price $4,150. The deed indicates the transfer is from Project Philanthropy, Inc. a nonprofit coorporation duly organized and existing under and by virtue of the laws of the District of Columbia. (whose address is 705 Osterman Drive, Suite B, Bozeman, MT 59715) the same address of the closing company! The seller listed on the eBay ad is sellingshares, Matthew W. Tarpey, Bozeman MT 59771. In addition to the winning bid amount, the other listed fees include closing costs: $475; County Recording Fee, $90; Resort Transfer Fee, $65; and 2007 Maintenance Fee: $710. There is no mention of Hawaii Income Tax Withheld fees. If we sign the N-288 form, does that mean we are responsinblre to pay this additional $207.50?

We also received a deed today for a Pono Kai timeshare, obtained from a recent eBay purchase, which was closed by the same company. On this auction, the seller was sellingshares, but the Purchase Contract came from Matthew W. Tarpey at Go Timeshare LLC, PO Box 7183, Bozeman, MT 59715. The deed indicates the seller is from San Diego, Ca. Enclosed in the paperwork was another Hawaii Withholding Tax Return Form N-288A. The 5% of $1,147 withheld was $57.35, but we did not have to sign this form. It was just included in the paperwork we received along with the deed.

I have left a message for the closing agent, Alice Brown, to call me about this. Anyone familiar with these forms? When we purchased Pono Kai and Maui Schooner timeshares on eBay a few years ago, I don't remember these taxes being withheld at the time of transfer.

[basham Senior Member Find all posts View Profile Close basham]

I know nothing about this.

However, a google search on N 288 or maybe I used N-288 locates the form. Looking at the instructions , it looks like you, the buyer, are required to withold 5% of the purchase price and remit it to the state of HI.

ie. It does not appear to be an additional cost to you. merely a transfer of part of the purchase price and thus would affect the net amount received by the seller.

I would think the closing agent would do this

Hopefully you will post what your closing agent's explaination is.

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I hope you're right, anyway, thanks for your research, basham. Just don't understand why we have to sign the second withholding form for Kona Coast, bought in December, when we didn't have to sign the withholding form for Pona Kai purchased in November. Both resorts are in Hawaii. We got a copy of the Tax form for Pona Kai that was sent to Hawaii, showing the money was paid...but it wasn't paid by us. Each transaction was handled by different closing agents in the same company.

[somerville Senior Member Find all posts View Profile Close somerville]

I am also in the process of purchasing a HI timeshare, and I required the seller to send in the N-288B, which requests a waiver for withholding due to the fact that the seller will have no gain.

You need to make sure the closing company remits the tax payment to the state of HI with the signed form. In addition, I believe you are responsible for preparing the N-288A reporting form. This is Hawaii's equivalent to the federal law that requires withholding on sales of real estate by foreigners.

You can find these forms on the HI tax website. http://www.state.hi.us/tax/a1_forms.htm

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I just spoke to the closing agent. She apologized for sending us the N-288A form. She explained that this was her first Hawaii closing and she now knows this procedure is handled on their end. The result is just as Basham stated, there is no additional cost to us. The tax is taken from the purchase price and only affects the net amount received by the seller. I am relieved.