Yes, you can buy property in Hawaii. There are no residency requirements and no citizenship restrictions, so U.S. citizens, permanent residents, and foreign nationals all have equal access to the market. Owning a home in Hawaii does not grant you immigration status, and buying while visiting on a tourist visa is permitted. What makes Hawaii different is not who gets to buy — it’s what you’re buying into: two distinct ownership structures, some of the highest non-resident property tax rates in the country, zoning rules that can forbid the house you had in mind, and environmental risks that affect whether you can insure or even build on the land.
Who Can Buy
Hawaii imposes no restrictions on purchasers. You don’t need to live in the state, hold a specific visa, or establish residency before buying. Foreign buyers face the same purchasing process as U.S. citizens at the front end of the transaction.
The complication for foreign buyers arrives at the back end, when they sell. The Foreign Investment in Real Property Tax Act requires the buyer to withhold 15% of the sale price when purchasing U.S. real property from a foreign seller and send it to the IRS.1Internal Revenue Service. FIRPTA Withholding That withholding drops to zero if the buyer plans to use the property as a residence and the sale price doesn’t exceed $300,000, but that threshold rarely helps in Hawaii, where the statewide median single-family home price sits around $575,000.2Internal Revenue Service. Exceptions From FIRPTA Withholding Hawaii piles its own withholding on top of that, covered below.
Fee Simple vs. Leasehold Ownership
Confusing these two is one of the costliest mistakes a mainland buyer can make. About 98% of properties on the market are fee simple, meaning you own the land and the structure outright and can hold, sell, or pass it on indefinitely, subject to zoning and deed restrictions. This is the ownership form most buyers expect.
Leasehold is distinctly Hawaiian. You buy the building or condo unit but lease the land underneath from a separate landowner, paying ground rent on top of your mortgage. When the lease expires, the land, and often the improvements on it, revert to the landowner.3Justia. Hawaii Revised Statutes Title 13 Chapter 205 Section 205-2 – Districting and Classification of Lands Ground rent on leasehold condos typically renegotiates every 10 to 20 years and can jump substantially.
Leasehold properties list for noticeably less than comparable fee simple units, which is the trap. Value erodes as the remaining lease term shrinks, and once the term dips below roughly 30 years, both resale value and financing options collapse. Fannie Mae requires the lease to extend at least five years beyond the mortgage maturity date, so a 30-year loan needs about 35 years of remaining term.4Fannie Mae. B2-3-03 Special Property Eligibility and Underwriting Considerations Leasehold Estates For a leasehold listing, the remaining lease term and the date of the next rent renegotiation matter more than the sticker price.
Hawaii law does allow conversion of leasehold interests to fee simple under HRS Chapter 516, but conversions require cooperation from the landowner or specific government action, and the incentives that drove historical conversions have largely expired.5Justia. Hawaii Revised Statutes Title 12 Chapter 171 Section 171-50-2 – Exchanges for Conversion of Leasehold Lands to Fee Simple Ownership Don’t buy a leasehold on the assumption you’ll convert later.
What Property Taxes Will Cost You
Hawaii’s property tax rates vary dramatically by county and, more importantly, by whether you live in the home. Each of the four counties sets its own rates, and the gap between owner-occupant and non-owner-occupant rates is enormous.
For fiscal year 2026 (July 2025 through June 2026), rates per $1,000 of assessed value break down as follows:6Real Property Assessment Division. Real Property Tax Rates for Tax Year July 1, 2025 to June 30, 2026
- Honolulu (Oahu) residential properties are taxed at $3.50 per $1,000. Non-owner-occupied residential properties valued over $1 million jump to $11.40 per $1,000.
- Maui owner-occupied homes up to $1.3 million are taxed at just $1.65 per $1,000. Non-owner-occupied rates start at $5.87 and reach $17.00 per $1,000 above $3 million.
- Kauai owner-occupants pay $2.59 per $1,000. Non-owner-occupied rates range from $5.45 to $9.40.
- Hawaii County (Big Island) homeowner-occupied properties are taxed at $5.95 per $1,000. Non-owner residential rates start at $11.10 and climb to $13.60 for portions valued at $2 million or more.
If you’re buying as a non-resident investor or a vacation-home owner, your annual property tax bill can run two to five times what an owner-occupant pays on the same house. On Maui, a $2 million non-owner-occupied property faces an effective rate more than five times the owner-occupant rate. Build that into your purchase math from the start.
Closing Costs, Conveyance Tax, and HOA Fees
Expect closing costs of 2% to 5% of the purchase price. On a $750,000 condo, that’s roughly $15,000 to $37,500 on top of the sale price. Costs typically include loan origination fees, appraisal, title insurance, escrow fees, and recording charges.
Hawaii also charges a conveyance tax on property transfers under HRS Chapter 247, paid at closing, with rates that step up at higher price tiers. Who pays this is sometimes negotiated between buyer and seller.
HOA fees deserve their own line of attention, especially for condominiums. Hawaii’s condo fees are among the highest in the country, commonly $400 to $1,500 per month depending on the building’s age, location, and amenities. Older buildings carrying deferred maintenance or facing special assessments can push costs well above that. Before making an offer on a condo, request the HOA’s financial statements and reserve study. A low purchase price means nothing if monthly fees and a pending special assessment eat your budget.
What Gets Withheld When a Non-Resident Sells
If you’re buying from out of state or from another country, you’ll eventually be the seller, and Hawaii pulls money out of the proceeds at closing before you ever file a return.
HARPTA (State Withholding)
The Hawaii Real Property Tax Act requires the buyer to withhold 7.25% of the sale price when purchasing from a non-resident seller and remit it to the Hawaii Department of Taxation.7Justia. Hawaii Revised Statutes Title 14 Chapter 235 Section 235-68 – Withholding of Tax on the Disposition of Hawaii Real Property Hawaii presumes every seller is non-resident unless they prove otherwise. You can avoid the withholding by filing Form N-289 certifying Hawaii residency, or if the property was your principal residence and the sale price doesn’t exceed $300,000.8Hawaii.gov. Tax Facts 2010-1 Understanding HARPTA If your actual Hawaii tax liability comes in lower than what was withheld, you claim the difference as a refund when you file. To reduce withholding at closing based on an expected low or no gain, apply with Form N-288B at least 10 working days before the transfer date.
FIRPTA (Federal Withholding)
Foreign sellers face an additional 15% federal withholding under FIRPTA at closing.1Internal Revenue Service. FIRPTA Withholding Stacked with HARPTA, a foreign national selling Hawaii property can see 22.25% of the sale price held back before receiving proceeds. FIRPTA withholding can be reduced or eliminated with a withholding certificate from the IRS, but the application takes time; starting after escrow opens is usually too late.
Rental Income Is Taxed on Gross, Not Profit
Rent out your Hawaii property and you owe Hawaii’s General Excise Tax on gross rental income at 4%, plus a 0.5% county surcharge in all four counties, for an effective 4.5% rate.9State of Hawaii Department of Taxation. An Introduction to Renting Residential Real Property10Hawaii Department of Taxation. County Surcharge on General Excise and Use Tax GET applies to gross rent, so you owe it even in a year you lose money after expenses.
Short-term rentals, defined as stays under 180 days, trigger the Transient Accommodations Tax, which increased to 11% effective January 1, 2026.11Hawaii Department of Taxation. Department of Taxation Announcement No. 2026-01 Individual counties may add their own transient accommodations surcharge on top of the state rate. Between GET, TAT, and county surcharges, the combined tax burden on short-term rentals cuts significantly into revenue.
Short-Term Rental Rules Are Strict and Vary by County
If vacation-rental income is central to your purchase, verify zoning and permit status before making an offer. Hawaii has no single statewide permitting framework; each county sets its own rules, and enforcement has intensified.
Honolulu (Oahu) is the clearest example. Short-term rentals, defined as lodging for fewer than 30 consecutive days, are only permitted in resort-zoned areas and a limited number of apartment-zoned areas. Properties outside those zones cannot legally operate as vacation rentals unless they hold a grandfathered nonconforming use certificate issued for operations predating October 1986. Those certificates must be renewed annually between September 1 and October 15; miss the deadline and the certificate is lost permanently.12Department of Planning and Permitting. Short-Term Rentals Sellers on Oahu must provide a short-term rental disclosure form stating whether the property can legally be used for vacation rentals.
Maui, Kauai, and Hawaii County each run their own permit systems with limited availability. Running an unpermitted short-term rental in any county carries fines and enforcement action.
Land Use and Zoning Can Forbid the House You Have in Mind
Hawaii classifies all land statewide into four districts: urban, rural, agricultural, and conservation.3Justia. Hawaii Revised Statutes Title 13 Chapter 205 Section 205-2 – Districting and Classification of Lands That state-level classification sits on top of each county’s zoning ordinances, producing a layered system more restrictive than most mainland buyers assume.
Agricultural land is where buyers get tripped up most. You can build a farm dwelling on agricultural land, but the property must be used for actual agricultural activity: growing crops, raising livestock, or similar uses.13Justia. Hawaii Revised Statutes Title 13 Chapter 205 Section 205-4-5 – Permissible Uses Within the Agricultural Districts Buying a scenic agricultural parcel to build a purely residential estate, with no farming use, violates zoning law regardless of what a seller suggests. Conservation-district land is even more restricted, with development essentially prohibited.
Each county’s planning department handles permits and enforces local rules on heights, setbacks, density, and permitted uses within the state districts. Check both the state land use classification and the county zoning before you make assumptions about what can be built.
Lava Zones and Shoreline Setbacks
Lava Zones on Hawaii Island
The Big Island is divided into nine lava-flow hazard zones. Zone 1 covers the summits and active rift zones of Kilauea and Mauna Loa where eruptions originate; Zone 2 covers areas immediately adjacent and downslope.14U.S. Geological Survey. Frequently Asked Questions and Answers About Lava-Flow Hazards Property in Zones 1 and 2 lists cheaper for a reason: standard homeowners insurance is difficult or impossible to obtain on the private market.
The Hawaii Property Insurance Association was created by the state legislature in 1991 to provide basic coverage for homeowners who can’t get insured privately due to volcanic risk. HPIA policies cap dwelling coverage at $450,000 with deductibles from $500 to $3,000.15Hawaii Property Insurance Association. Welcome/History of HPIA If your home costs more than $450,000 to rebuild, you absorb the excess risk. The 2018 Kilauea eruption destroyed over 700 homes, so this is not theoretical.
Shoreline Setbacks on Coastal Property
Coastal property carries a mandatory minimum 40-foot building setback from the certified shoreline, raised from 20 feet in 2020. Counties cannot grant variances below 40 feet for any new structure.16Hawaii.gov. Hawaii Coastal Zone Management Special Management Area Permitting and Shoreline Setbacks The certified shoreline location directly determines the buildable area of an oceanfront lot.
Shoreline certifications must be done by a licensed land surveyor, filed with the Department of Land and Natural Resources, and are valid for only 12 months.17Department of Land and Natural Resources. Chapter 13-222 Hawaii Administrative Rules – Shoreline Certifications Shorelines shift with erosion and sea-level rise, so the buildable area of a coastal lot can shrink between the time you buy and the time you apply for a permit.
Hawaiian Home Lands Are Not for Sale
One category of land is off the open market entirely. Hawaiian Home Lands are administered under the Hawaiian Homes Commission Act and leased only to applicants who are at least 18 and have at least 50% Native Hawaiian blood quantum.18Department of Hawaiian Home Lands. Applying for Hawaiian Home Lands If you come across a property described as a homestead lease, it is not something you can buy through a standard real estate transaction; the lease is between the homesteader and the state.