HARPTA Tax Guide for Aulani DVC Sellers
Selling your Disney Vacation Club Aulani membership? If you're not a Hawaii resident, understand the state tax withholding requirements and how to claim your refund.
Understanding Hawaii's Tax Law
What is HARPTA?
The Hawaii Real Property Tax Act (HARPTA) is a state tax withholding law that applies to all real estate transactions in Hawaii. Under this law, when a non-Hawaii resident sells property located in Hawaii, including Disney Vacation Club timeshare interests at Aulani Resort, the buyer or closing agent must withhold 7.25% of the gross sales price and submit it to the Hawaii Department of Taxation.
Aulani, A Disney Resort & Spa, is located in Ko Olina on the island of Oahu. DVC ownership at Aulani represents a deeded real estate interest in Hawaii, which means all sales are subject to HARPTA requirements when the seller is not a permanent Hawaii resident. This state-level withholding is separate from and in addition to any federal tax obligations.
The purpose of HARPTA is to ensure that non-residents of Hawaii pay their fair share of state income tax on gains from Hawaii real estate transactions. However, like its federal counterpart FIRPTA, the 7.25% withholding is often more than the actual tax liability, making most Aulani sellers eligible for partial or full refunds.
🌺 Important for Aulani Owners: The 7.25% withholding is a prepayment, not your final tax bill. Since many DVC members purchased Aulani directly from Disney at premium prices and resale values have adjusted, most sellers experience minimal gains or even losses, qualifying them for substantial refunds of the withheld amount.
State vs Federal Requirements
HARPTA vs FIRPTA: Understanding Both
Many Aulani sellers are surprised to learn that they may face two separate withholding requirements. Understanding the distinction between HARPTA and FIRPTA is essential for planning your sale and maximizing your refund potential.
HARPTA (Hawaii State)
- Rate: 7.25% of sale price
- Applies to: Non-Hawaii residents
- Refund form: Form N-15
- Authority: Hawaii Dept. of Taxation
- Exemption form: Form N-289
FIRPTA (Federal)
- Rate: 15% of sale price
- Applies to: Non-U.S. persons
- Refund form: Form 1040-NR
- Authority: Internal Revenue Service
- Requires: ITIN or SSN
Double Withholding Alert: If you are both a non-Hawaii resident AND a non-U.S. citizen, you may be subject to both HARPTA (7.25%) and FIRPTA (15%) withholding, totaling 22.25% of your sale price. Both amounts can potentially be refunded based on your actual tax liability.
Determining Your Status
Who Does HARPTA Apply To?
HARPTA applies based on your residency status in Hawaii, not your citizenship. This means even U.S. citizens who live in the mainland United States, Canada, or anywhere else outside Hawaii are subject to HARPTA withholding when selling Aulani DVC.
HARPTA Applies If You:
- • Live anywhere outside Hawaii
- • Are a U.S. citizen living on the mainland
- • Are a Canadian or international resident
- • Do not have Hawaii as your primary residence
HARPTA Does NOT Apply If You:
- • Are a permanent Hawaii resident
- • Have Hawaii as your primary residence
- • Provide Form N-289 to certify residency
- • Meet specific exemption criteria
The vast majority of Aulani DVC owners live outside Hawaii, which means most Aulani resale transactions are subject to HARPTA withholding. Our team at DVC Sales has extensive experience helping sellers from across the United States and internationally navigate these requirements.
Step-by-Step Guide
The HARPTA Process & Refund Timeline
Complete Your Aulani DVC Sale
List and sell your Aulani membership through a licensed broker. At closing, the title company withholds 7.25% of the gross sales price. This amount must be submitted to Hawaii Department of Taxation within 20 days of closing along with Forms N-288 and N-288A.
Timeline: 30-60 daysGather Your Documentation
Collect your original purchase documents showing what you paid for the Aulani membership, closing statements from the sale, and any documentation of improvements or additional costs that may affect your tax basis.
Timeline: 1-2 weeksFile Form N-15
Submit Hawaii Form N-15 (Nonresident Income Tax Return) to report the sale and calculate your actual Hawaii tax liability. This form will show whether you owe additional taxes or are entitled to a refund of the withheld amount.
Timeline: File by April 20Receive Your Refund
Once Hawaii Department of Taxation processes your return, any excess withholding is refunded to you. Processing times vary, but most refunds are issued within 8-12 weeks of filing a complete and accurate return.
Timeline: 8-12 weeks after filingUnderstanding Your Refund Potential
Why Most Aulani Sellers Qualify for Refunds
Aulani DVC memberships have a unique position in the resale market that often results in favorable tax outcomes for sellers. When Aulani opened in 2011, direct purchase prices from Disney were at premium levels. Over time, resale market values have adjusted, meaning many original owners who sell today do so at prices lower than their initial purchase.
When you sell at a loss, there is no capital gain to tax. The 7.25% withholding was simply a precautionary measure, and you are entitled to a full refund. Even sellers who realize a small gain typically find that their actual tax liability is far less than the 7.25% withheld, resulting in a partial refund.
Additionally, selling expenses including broker commissions, closing costs, and Disney's administrative fees can be deducted from any gains, further reducing your tax liability. Many Aulani sellers find that after accounting for all allowable deductions, they owe little to no Hawaii state tax on the transaction.
Example Calculation:
A California resident purchases Aulani DVC for $18,000 in 2015 and sells for $15,000 in 2024. The 7.25% HARPTA withholding is $1,087.50. However, since the sale resulted in a $3,000 loss (plus closing costs), no Hawaii capital gains tax is owed. The seller can file Form N-15 and receive a full refund of the $1,087.50 withheld.
Responsibilities Overview
Buyer and Seller HARPTA Requirements
Both buyers and sellers have specific legal responsibilities under HARPTA. Understanding these requirements ensures a smooth transaction and protects all parties from potential penalties.
Buyer Responsibilities
- • Withhold 7.25% of the sale price from seller's proceeds
- • Submit payment within 20 days of closing
- • File Forms N-288 and N-288A with payment
- • Face penalties if withholding not completed properly
Seller Responsibilities
- • Provide Form N-289 if you are a Hawaii resident
- • File Form N-15 to claim any refund owed
- • Maintain records of original purchase price
- • Report the sale on year-end tax returns
Good News: When you sell through DVC Sales, our title company handles all HARPTA withholding and submission requirements automatically. This protects both buyers and sellers and ensures full compliance with Hawaii tax law.
Interactive Calculator
Estimate Your HARPTA Refund
Use this calculator to estimate how much of the 7.25% HARPTA withholding you may be able to recover. Enter your original Aulani purchase price and expected selling price to see your potential refund. For more information, visit DVCHARPTA.com.
| Description | Amount |
|---|---|
| Original Purchase Price | |
| Selling Price | |
| Broker Commission (10%) | |
| Closing Costs | |
| 7.25% HARPTA Withholding | |
| Net to Seller at Closing | |
| Taxable Gain/(Loss) | |
| Estimated Hawaii Tax Owed | |
| Estimated HARPTA Refund | |
| Percent of Withholding Refunded |
This calculator provides estimates only. Actual refund amounts depend on individual circumstances and Hawaii tax law.
Learn More at DVCHARPTA.comReady to Sell Your Aulani Membership?
Our team specializes in Aulani DVC resales and has helped many sellers navigate HARPTA requirements. Let us guide you through the process and help you maximize your refund.
