In Hawaii, quitclaim deeds incur both filing fees and transfer taxes. Federal taxes like capital gains and gift taxes may also apply depending on the situation.
Filing Fees
The Department of Land and Natural Resources sets forth filing fees for property conveyances, per Haw. Rev. Stat. § 502-25. The fees differ between the regular and land court systems and are as follows according to the Bureau of Conveyances’ recording fee schedule:
Regular System:
- $41 for deeds that are 50 pages or fewer.
- $106 for deeds that are more than 50 pages.
Land Court:
- $36 for deeds that are 50 pages or fewer.
- $101 for deeds that are more than 50 pages.
Taxes
Hawaiians transferring property through quitclaim deeds may be subject to state transfer taxes and two different types of federal taxes:
1. Documentary Transfer Tax (DTT)
Per Haw. Rev. Stat. § 247-2 (1)(2), Hawaii imposes a transfer tax known as a conveyance tax. This depends on property type, transfer type, and property value.
Who Pays the Transfer Tax?
The grantor usually pays the transfer tax.
Exemptions to Transfer Tax
Haw. Rev. Stat. § 247-3 states all exemptions to conveyance taxes in Hawaii. Common examples include:
- Transfers involving an exchange of $100 or less.
- Deeds used only to confirm or correct details in past deeds.
- Documents sectioning property equally between multiple owners.
- Quitclaims used as a part of a separation or divorce proceeding.
Tax Rates
Tax rates (per $100) for different types of property are based on their value. The rates are as follows:
| Property Value | General Property Transfers | Condominiums or Single-Family Residences Without Homeowner’s Exemption |
|---|---|---|
| Under $600,000 | $0.10 | $0.15 |
| Between $600,000 and $999,999 | $0.20 | $0.25 |
| Between $1,000,000 and $1,999,999 | $0.30 | $0.40 |
| Between $2,000,000 and $3,999,999 | $0.50 | $0.60 |
| Between $4,000,000 and $5,999,999 | $0.70 | $0.85 |
| Between $6,000,000 and $9,999,999 | $0.90 | $1.10 |
| Over $10,000,000 | $1.00 | $1.25 |
2. U.S. Gift Tax (Form 709)
- Since a common use of quitclaims is to transfer property between friends and family members for no “consideration” or payment, they are often legally considered gifts by the IRS.
- Using IRS Form 709, you can find out if you must pay a federal gift tax on your transfer of property. Several exemptions exist and are explained in detail in the form instructions.
3. Capital Gains Tax
- Hawaii has a state capital gains tax, as does the federal government. These apply when a piece of property is exchanged for more consideration than its cost.
- IRS Topic No. 409 and IRS Publication 551 detail the federal capital gains tax, including how to calculate it and which exemptions may apply.
