By Aksana Tupalskaya | August 23, 2026
Quick Answer
N-289 or N-288B: which HARPTA form does your Oahu sale need?
Use Form N-289 when you qualify for a full exemption from HARPTA withholding, meaning you’re a Hawaii resident seller, the sale qualifies for a nonrecognition provision like a 1031 exchange or a bequest, or the property was your principal residence and the amount realized is $300,000 or less. Use Form N-288B when you don’t qualify for a full exemption but expect your actual tax owed to be less than the standard 7.25% withholding, and you want that lower number withheld at closing instead of waiting on a refund.
N-289: the exemption form
Form N-289 tells the buyer not to withhold anything at all, because one of three things is true: you’re a Hawaii resident person for tax purposes, the transfer qualifies for a nonrecognition provision Hawaii conforms to, which includes 1031 like-kind exchanges, gifts, transfers by bequest, and transfers incident to divorce, or the property was your principal residence for the year before the sale and the amount realized doesn’t exceed $300,000. [SOURCE: State of Hawaii Department of Taxation, Tax Facts 2010-1, revised April 2025]
The Department is explicit that even a resident seller needs to hand the buyer a completed N-289, calling the assumption that residency alone is enough “a common misperception.” Without it in hand, the buyer must withhold regardless of what they know about you personally. If you’re doing a 1031 exchange out of Hawaii into mainland property, N-289 is also how you avoid withholding entirely, and importantly, the replacement property does not have to be in Hawaii for this exemption to apply.
N-288B: the reduction form
Form N-288B is for the more common in-between case: you don’t qualify for a full N-289 exemption, but your actual tax liability is genuinely less than what standard withholding would take. This is exactly the situation for many inherited-property sellers, whose stepped-up basis means a small real gain even though the full sale price would otherwise trigger a full 7.25% withholding.
The catch that trips people up is timing. N-288B must be filed at least 10 working days before the transfer date or the Department will not approve it in time, and once that window closes your only remaining option is paying the full withholding and requesting a refund afterward through Form N-288C.
| Situation | Correct Form | Deadline |
|---|---|---|
| Hawaii resident seller | N-289 | Give to buyer before or at closing |
| 1031 exchange, gift, bequest, or divorce transfer | N-289 | Give to buyer before or at closing |
| Principal residence, sale price $300,000 or less | N-289 | Give to buyer before or at closing |
| Real gain is less than standard withholding would take | N-288B | At least 10 working days before transfer |
| Missed the N-288B window, already withheld in full | N-288C | Filed after closing, to request a refund |
What this tells me as the numbers agent for Oahu sellers: the two forms aren’t interchangeable backups for each other, they answer two completely different questions, exemption versus reduction, and picking the wrong one costs you either time or money.
Why this decision is worth getting right before closing, not after
Every one of these forms works before the transfer date, and every fallback option works only after, meaning slower and with the state holding your money in the meantime. The Department cannot request a refund on your behalf, only you can, and escrow companies generally will not chase this down for you unprompted. Getting your CPA or tax attorney to confirm which form applies as soon as you’re under contract, not the week of closing, is what actually keeps your proceeds intact at the closing table instead of tied up for months.
Frequently Asked Questions
Can I use N-289 if I’m selling through a 1031 exchange?
Yes. A 1031 like-kind exchange is one of the nonrecognition provisions Hawaii conforms to, so N-289 can be used to claim that exemption, along with a description of the transfer and supporting facts.
What happens if I qualify for N-289 but forget to give it to the buyer?
Without a completed N-289 in the buyer’s hands at closing, the buyer is required to withhold 7.25%, even if you would have otherwise qualified for a full exemption. You’d then need to recover the withholding afterward instead of avoiding it at closing.
Can I use N-288B if I already know I owe some tax, just not the full withholding amount?
Yes. N-288B is specifically designed for cases where the tax due is less than the standard withholding, not just for zero-gain situations. It reduces withholding to match your actual expected liability.
This is general information about Hawaii tax withholding forms, not tax advice for your specific sale. A CPA or tax attorney should confirm which form applies to you. If you’re weighing a 1031 exchange against selling outright, book a free 20-minute strategy call here, or read the related post on 1031 exchange versus selling outright here.
