Real Estate Investors & Developers Bookkeeping in Hawaii

Beyond sales tax, Hawaii levies the General Excise Tax (GET) on gross income from nearly all business activity, payable by the business, though it is commonly visibly passed on to customers. far broader than a sales tax. Services, commissions, rent, and wholesaling are all within scope, with wholesaling taxed at a lower rate than retail. County surcharges apply on top on some islands. The consequence for your books is direct: GET is calculated on gross income, so netting a platform fee or a subcontractor payment out of revenue understates the tax base. Recording revenue gross is not optional here. It is registered and filed separately from anything the Hawaii Department of Commerce and Consumer Affairs handles, and it accrues on revenue rather than on profit — so it is recorded as it builds, not discovered at year end.

Hawaii levies a real estate transfer or deed tax at closing, on top of recording fees and title charges. Each of those gets a different treatment — some capitalize into basis, some are deductible now — and drawing that line inconsistently across years is the single most common problem we find in investor books. Getting it right at closing is far cheaper than reconstructing it later.

The Hawaii statewide base rate is 4%. Taken alone that is low by national standards and it is genuinely misleading — local rates do most of the work in Hawaii, and the combined figure at the delivery address is the only one that matters. Sourcing is where this is won or lost, and with economic nexus set at $100,000 in sales or 200 transactions, it becomes your problem the moment that threshold is crossed.

Registering to do business in Hawaii runs through the Hawaii Department of Commerce and Consumer Affairs, with tax accounts through the Hawaii Department of Taxation and employer accounts through the Hawaii Department of Labor and Industrial Relations. Hawaii treats these as wholly independent, so being in good standing with one says nothing about the others — and the sales tax account is the one that accrues a real balance while you are not looking.