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Hawaii does not have a sales tax; instead, we have the GET, which is assessed on all business activities. The tax rate is 0.15% for Insurance Commission, 0.5% for Wholesaling, Manufacturing, Producing, Wholesale Services, and Use Tax on Imports For Resale, and 4% for all others.
The property must be a business or investment property, which means that it cant be personal property. Your home wont qualify for a 1031 exchange. However, a single-family rental property that you own could be exchanged for commercial rental property.
Effective December 14, 2021, the OTAT is levied at a rate of 3% on every taxpayer that has taxable gross rental proceeds and/or fair market rental value attributable to Oahu if the taxpayer lets the transient accommodation for less than 180 consecutive days.
One property can be exchanged for two or more properties. Two or more properties can be exchanged for one replacement property, and as long as the new property is worth more than the old one by at least $1, there will be no tax. Investment property can be exchanged for business property.
You may register for the GET and the TAT by completing Form BB-1, State of Hawaii Basic Business Application. The Page 12 8 form is available at tax.hawaii.gov or may be picked up at any district tax office.
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All guestroom and suite rates are subject to the prevailing Hawaii State General Excise Tax at 4.712%, Hawaii Transient Accommodations Tax at 10.25% and Oahu Transient Accommodations Tax at 3% (combined rate of 17.962%).
Hawaii has a 4.00 percent state sales tax rate, a 0.50 percent max local sales tax rate, and an average combined state and local sales tax rate of 4.44 percent. Hawaiis tax system ranks 41st overall on our 2022 State Business Tax Climate Index.
Interest in a partnership cannot be used in a 1031 exchangepartners in an LLC do not own property, they own interest in a property-owning entity, which is the taxpayer for the property. 1031 exchanges are carried out by a single taxpayer as one side of the transaction.
On Oahu, the GET tax rate is 4.5%, and must be calculated on the GE Taxable Income 2) TAT Transient Accommodation Tax is due on all rental income (plus cleaning fees collected) from rental terms less than 180 days per tenant. 10.25% TAT must be calculated on the TA Taxable Income.
One way to avoid taxes, or at least delay them, is through a 1031 exchange. A 1031 exchange allows you to exchange Hawaii real estate property for a like-kind, so that no gain is realized and no tax is paid on the sale.

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