Hawaii Real Estate State Practice Exam

Which party typically incurs the cost of conveyance tax in a real estate transaction?

1. The seller

2. The buyer

3. Shared equally between parties

4. Escrow company

The correct answer is: The seller

In a typical real estate transaction in Hawaii, the conveyance tax is generally incurred by the seller. This tax is imposed on the sale of real property, and it is the responsibility of the seller to pay this fee at the time of closing the transaction. The basis for this practice is rooted in local customs and practices, which have established that the seller typically bears the financial responsibility for this tax. This tax is calculated based on the sale price of the property, and it is essential for sellers to factor this cost into their overall financial planning when listing a property for sale. While negotiation may sometimes result in the buyer agreeing to pay certain costs, the standard expectation remains that the seller will cover the conveyance tax. Understanding these obligations helps both parties better prepare for the financial aspects of a transaction, ensuring that all involved are clear on their responsibilities during the transfer of real estate.