Did you buy your Hawaii luxury property through an offshore LLC to protect your privacy? It might have felt like a brilliant move at the time, but when it’s time to sell, that offshore entity could cost you nearly half of your hard-earned equity.
If you own Hawaii real estate personally or through a standard U.S. LLC, selling is relatively straightforward: you pay your standard capital gains tax and move on. However, if your property is held by a foreign corporation—like a Cayman Islands LLC—the IRS treats the transaction completely differently.
In this video, we break down the painful cash flow shocks and massive tax liabilities foreign entities face at the closing table, including:
- The Withholding Shock: Why the buyer is legally required to withhold 22.25% of your gross sales price (15% for federal FIRPTA + 7.25% for Hawaii HARPTA) before you even see a dime of profit.
- Corporate Tax vs. Capital Gains: Why foreign corporations lose out on the ~20% long-term capital gains rate and are instead hit with a 21% U.S. Corporate Income Tax.
- The Hidden Penalty: The devastating 30% “Branch Profits Tax” applied to your after-tax earnings when moving profits offshore, pushing your effective tax rate to 45%–50%.
Don’t let your hard-earned equity get lost in translation. Tax treaties and specific elections exist, but they must be structured long before your CPA starts panicking three days before closing.
Whether you are a global investor looking to acquire or an international owner preparing to sell, strategic planning is your most valuable asset. With over two decades of bridging global opportunities and luxury real estate, we ensure your exit strategy is as smart as your investment.
Note for Asia-Pacific Audiences: Subtitles are available in Traditional and Simplified Chinese. 歡迎預約中文諮詢。
📱 Let’s discuss your Hawaii real estate strategy:
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