How could one penny save you $15,000 when selling real estate on Maui?
It sounds crazy, but at certain price points, that one-cent difference can have a major impact on Hawaii’s conveyance tax.
And it’s a perfect example of why having an experienced Maui real estate agent matters. Buying and selling real estate here involves much more than knowing how to write a contract, market a property or negotiate a price. Sometimes the smallest details can make a very big financial difference.
Understanding Hawaii’s Conveyance Tax
When you sell real estate in Hawaii, conveyance tax is generally assessed as part of the transaction.
But here’s where it gets interesting: the tax rate changes at certain sales-price thresholds.
That means there can be a significant difference between selling a property for exactly $1 million and selling it for $999,999.99.
The difference in sales price?
One penny.
The potential difference in conveyance tax?
Thousands of dollars.
And as property values increase, so can the potential savings.
When One Penny Becomes Worth Thousands
Let’s look at a few examples.
Around the $600,000 threshold, landing just below the next tax tier could potentially save approximately $600 in conveyance tax.
At $1 million, the potential savings can be around $1,500.
At $2 million, it can be approximately $4,000.
At $4 million, the difference can reach approximately $10,000.
And at some of the higher Maui luxury price points, that one-cent difference can potentially mean as much as $15,000 in conveyance tax savings.
Think about that.
$9,999,999.99 versus $10,000,000.
The seller receives one penny less for the property, but that penny could potentially save $15,000.
That’s a pretty valuable penny.
90 Transactions and More Than $300,000
I recently looked through Maui sales from the past two years and found approximately 90 transactions that closed right at one of these conveyance-tax thresholds.
When I calculated the potential difference, those transactions represented approximately $307,200 in conveyance tax savings that may have been available if each transaction had closed just one penny below the applicable threshold.
Across 90 transactions, the combined reduction in purchase prices would have been just:
90 cents.
Potential savings:
$307,200.
That’s why details matter.
Why Your Maui Real Estate Agent Should Know This
Most buyers and sellers aren’t expected to understand every nuance of Hawaii’s conveyance-tax system.
That’s part of the expertise your real estate professional should bring to the table.
If we’re negotiating a multimillion-dollar Maui property and the buyer and seller have essentially agreed on the economics of the deal, I want to look at the entire transaction.
Is there a tax threshold we should be aware of?
Could changing the price by a penny—or another relatively insignificant amount—create a meaningful financial benefit?
Could those savings help the buyer and seller bridge another negotiating issue?
Those are the kinds of questions an experienced agent should be asking.
Because I’d much rather find a way for my buyer or seller to benefit from that money than see thousands of dollars unnecessarily disappear because nobody noticed where the final sales price landed.
Maui Real Estate Has a Lot of Nuances
Conveyance tax is just one example.
Maui real estate comes with zoning considerations, vacation-rental regulations, property-tax classifications, condominium documents, insurance issues, special assessments, shoreline considerations and plenty of other details that can affect the value of a property and the outcome of a transaction.
Knowing the property is important.
Knowing how to structure the transaction is equally important.
I’ve been selling Maui real estate for 26 years and have spent 35 years in the real estate business. I’ve helped more than 800 people buy and sell Maui real estate and have been involved in more than $1 billion in sales.
Those numbers aren’t important because they’re numbers.
They’re important because experience teaches you where to look, what questions to ask and which small details can make a big difference for a buyer or seller.
Sometimes that difference is complicated.
And sometimes it’s as simple as one penny.
If you’re considering buying or selling Maui real estate and want to understand how to approach the transaction strategically, give me a call or text.
I’m Tom Tezak with Hawaii Life, and you can reach me directly at 808-280-2055.
And if you’re getting ready to buy or sell, check out our guide, 37 Questions You Need to Ask Before Buying or Selling Maui Real Estate. It’s designed to help you understand the questions you should be asking before making a major real estate decision.
Because when you’re buying or selling Maui real estate, one cent really can make a $15,000 difference.