For Canadian residents with a Hawaii condo, home or vacation rental
Canadians With Property in Hawaii: Rental Taxes, HARPTA and US Filings
Hawaii adds more state taxes to a rental than most states: income tax, the general excise tax and, for short stays, the transient accommodations tax. On a sale, Hawaii has its own withholding, HARPTA, on top of federal FIRPTA.
Quick answer
What Hawaii taxes apply when a Canadian rents out a Hawaii property?
The Hawaii Department of Taxation says renting out Hawaii real property makes you subject to Hawaii income tax and the general excise tax (GET), and to the transient accommodations tax (TAT) as well for stays of less than 180 consecutive days; nonresidents report net rental income on Form N-15 (Hawaii DOTAX). Federally, the rent goes on Form 1040-NR with the real property election.
At a glance
- Hawaii income tax
- Nonresidents report net rental income on Form N-15
- General excise tax
- Applies to rental income
- Transient accommodations tax
- Added for rentals of less than 180 consecutive days
- Sale
- HARPTA 7.25% of the amount realized, plus federal FIRPTA
Hawaii's rules for a nonresident owner
Renting. The Department of Taxation treats renting out Hawaii residential property as a taxable business activity. You are subject to Hawaii income tax and the general excise tax; rentals to a transient person for less than 180 consecutive days also bring the transient accommodations tax, and even one weekend's rent counts. Nonresidents file Form N-15 to report net rental income or loss (Hawaii DOTAX brochure).
Selling. Under HARPTA (section 235-68, Hawaii Revised Statutes), the buyer withholds 7.25% of the amount realized and pays it with Forms N-288 and N-288A. A seller who will have no gain can apply for a withholding certificate on Form N-288B, filed at least 10 working days before the transfer, and a tentative refund is available on Form N-288C. Even with a certificate, the seller must still file a Hawaii income tax return for the year of the sale (Hawaii Tax Facts 2010-1).
What the IRS expects from a Canadian with Hawaii property
While you own it. Gross rent paid to a nonresident is subject to 30% withholding. The alternative most owners choose is the real property election under Code section 871(d): the rental is then taxed like a business on Form 1040-NR, after expenses and depreciation (IRS Pub 519). If you spend long winters in Hawaii, count your days; passing the substantial presence test without filing Form 8840 can make you a US resident for tax.
When you sell. The buyer withholds under Code section 1445 (FIRPTA), generally 15% of the amount realized, with lower rates for homes the buyer will live in (10% up to US$1,000,000; none up to US$300,000) (IRS Pub 515). You then file Form 1040-NR to report the gain and recover any excess. More: FIRPTA, snowbird days.
The Canada-US treaty and US law
- Canada-US income tax treaty, general effective date (IRS Table 3): treaty January 1, 1985; 3rd protocol January 1, 1996; 4th protocol December 16, 1997; 5th protocol January 1, 2009 (IRS Table 3; IRS treaty documents).
- Article VI (Income from Real Property): rent from Hawaii property may be taxed in the US.
- Article XIII (Gains): the US may tax the gain on selling US real property.
- Article XXIV (Elimination of Double Taxation): how Canada and the US relieve double tax on the same income.
- Article IV (Residence): the tie-breaker for someone resident in both countries, starting with where you have a permanent home.
- US law: Code section 871(d) real property election (Pub 519); Code section 1445 FIRPTA withholding (Pub 515); Form 8840 closer connection (Pub 519).
- Canadian tax on the same property is a matter for Canadian rules and your Canadian accountant.
How we help
Gurleen Kaur, CPA licensed in British Columbia and Washington State, prepares the federal 1040-NR for Hawaii rentals and the year-of-sale return that settles FIRPTA, and works through the Hawaii returns and HARPTA paperwork with you. Written quote first.
Common questions
What is the HARPTA withholding rate in Hawaii?
7.25% of the amount realized, withheld by the buyer under section 235-68 of the Hawaii Revised Statutes.
Does a Canadian file a Hawaii return for a rental?
Yes. The Department of Taxation says nonresidents report net rental income or loss on Form N-15.
Do short-term rentals in Hawaii have extra tax?
Yes. Rentals to a transient person for less than 180 consecutive days are subject to the transient accommodations tax in addition to income tax and the general excise tax.
Sources
Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.
- Hawaii Department of Taxation: Residential real property rental brochure
- Hawaii Department of Taxation: Tax Facts 2010-1, Understanding HARPTA (Rev. April 2025)
- IRS: Publication 519
- IRS: Publication 515
- IRS: Canada tax treaty documents
- IRS: Tax treaty tables (Table 3, list of treaties)
Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated November 11, 2026. This page is general information, not tax or legal advice for your situation.
Related guides: Selling US property, FIRPTA, California property.
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