People searching for Kona real estate information online get a lot of answers written for markets in Ohio or Arizona. Hawaii real estate is genuinely different, and the questions that matter most to buyers and sellers here are not the ones national real estate sites are optimized to answer.
After 35 years as a real estate attorney and several years selling property on the Kona and Kohala Coast, these are the questions I get most often, and the ones where getting the answer wrong costs people real money or derails transactions entirely. I have tried to answer them the way I would if you asked me at dinner: directly, with the specifics that actually matter.
Key Takeaways
- Hawaii has several real estate concepts that do not exist on the mainland: leasehold ownership, CPR units, HARPTA withholding, and lava flow hazard zones. All affect how you buy, sell, finance, and insure property here.
- HARPTA applies to most mainland sellers of Hawaii property and affects net proceeds at closing. It is not optional and needs to be addressed during escrow.
- Leasehold properties are more common in Kona than most buyers expect, particularly in older condo developments. The financing and resale implications are significant.
- Hawaii County property tax has multiple use classifications and a homeowner exemption that does not transfer automatically to new owners. Verify the current treatment before you close.
- The Kona market does not follow mainland seasonal patterns. There is no spring selling season. Understanding what actually drives activity here changes how you time a purchase or sale.
What is HARPTA and does it apply to me?
HARPTA stands for Hawaii Real Property Tax Act. It requires the buyer's closing agent to withhold a percentage of the gross sales price when the seller is not a Hawaii resident at the time of sale, and remit that amount to the Department of Taxation. The withholding rate for most transactions is 7.25% of the gross sales price. Not the gain, the gross price. On a $700,000 sale that is $50,750 withheld at closing.
HARPTA applies regardless of whether you made a profit. If you are a mainland seller selling a Kona property, it applies to you unless you qualify for an exemption or apply for an adjusted withholding certificate based on actual gain. The application process needs to start before closing, not after. If you wait until after closing, the money has already been remitted and getting it back requires filing a tax return and waiting for a refund.
HARPTA is often confused with FIRPTA, which is the federal equivalent for foreign sellers. The two can apply simultaneously if the seller is a foreign national. For our deeper breakdown of both, see our post on HARPTA and FIRPTA for Hawaii real estate.
What is the difference between leasehold and fee simple in Hawaii?
Fee simple means you own the land and everything on it. Leasehold means you own the structure or unit but lease the land from a separate landowner under a recorded ground lease for a set term, often decades. When the lease expires, the land stays with the landowner. Your rights at expiration depend entirely on what the lease says about renewal.
Leasehold is more common in Hawaii than on the mainland, particularly in older resort-area and Ali'i Drive condo developments in Kona. It affects how you finance the property, what it costs to own over time through ground rent and potential rent resets, and how easy it is to sell when you are ready to move on. Lenders apply extra scrutiny to leaseholds and some loan programs are not available for certain leasehold properties at all.
The discount a leasehold sells at relative to a comparable fee simple property exists for a reason. Your job as a buyer is to understand whether that discount accurately reflects the risk, not just whether the price looks attractive. Our full post on leasehold vs. fee simple in Kona covers financing, ground rent resets, conversion, and due diligence in detail.
What is a CPR unit in Hawaii real estate?
CPR stands for Condominium Property Regime. In Hawaii, a CPR is a legal mechanism that allows a property owner to divide land or improvements into separately ownable units, essentially creating condominiums without necessarily building a traditional condo complex. Two houses on the same parcel, an ohana unit, or a property with a main house and a detached cottage can all be CPR'd to create separately titled units that can be sold independently.
CPR units are common in Kona and across the Big Island, particularly on agricultural and rural parcels. They can offer a lower entry price into a neighborhood that would otherwise be out of reach, but they come with their own due diligence requirements. Review the CPR declaration carefully. It establishes what each unit owns exclusively, what is common, and what rights each unit holder has. Some CPR declarations have restrictions on use, rental, or further subdivision that are not obvious from the MLS listing. Your title company and, ideally, a real estate attorney should review the declaration before you remove contingencies.
What are lava flow hazard zones and how do they affect buying in Kona?
The USGS Hawaiian Volcano Observatory maps Hawaii Island into lava flow hazard zones numbered 1 through 9, with lower numbers indicating higher historical risk from lava flows. Zone 1 covers active rift zones. Zone 9 covers areas with no recorded flows in historical time.
Most of Kona sits in Zone 4, which covers the flanks of Hualalai, a volcano considered dormant but not extinct, with its last known eruption in 1801. Zone 4 is not the highest-risk designation, but it is real. Lenders factor the zone into underwriting and some insurers have specific exclusions or higher premiums for lava coverage. South Kona and Captain Cook are also generally Zone 4. The active rift zones of Kilauea in lower Puna are Zones 1 and 2. A very different risk profile from West Hawaii.
Confirm any specific parcel's lava zone early in your search, not after you have made an emotional commitment to a property. The zone is verifiable through the USGS HVO website using the property's address or TMK. Our post on elevation and home prices in North Kona covers lava zones and what they mean practically for insurance and financing.
How does Hawaii County property tax work?
Hawaii County assesses real property based on fair market value and applies different tax rates depending on the property's use classification. The classifications matter because the rates differ significantly. Owner-occupied residential properties with an active homeowner exemption pay at the residential rate. Vacation rental properties, investment properties, and properties not claimed as a primary residence pay at higher rates. The difference between categories can add thousands of dollars per year in property taxes on the same property.
The homeowner exemption reduces the assessed value for qualifying owner-occupants and is available to Hawaii residents who use the property as their primary home. The exemption does not transfer automatically to a new owner. If you buy a property where the prior owner had the exemption, confirm with the County Real Property Tax Division whether the exemption is still on file and what you need to do to establish your own. The county's tax year runs from July 1 to June 30, and the deadline to file for the exemption is December 31 for the following tax year.
One more thing mainland buyers get surprised by: Hawaii property taxes are generally lower than mainland rates, but insurance costs, particularly for wind, storm, and lava coverage, can be significantly higher. Budget both when you are estimating carrying costs.
How does the escrow and closing process in Hawaii differ from the mainland?
The biggest difference is recording. In Hawaii, property does not technically close until the deed is recorded with the State Bureau of Conveyances in Honolulu, not at the county level as on the mainland. Recording happens after the escrow company receives and verifies all funds and documents. The time between signing and recording can span a day or more, which affects when you have legal title and when you can take possession.
Hawaii uses escrow companies rather than closing attorneys in most transactions, which is similar to Western states. The escrow officer handles the mechanics: collecting funds, coordinating payoffs, preparing closing documents, and disbursing proceeds. They do not provide legal advice. If your transaction has complexity around title, probate, leasehold, or CPR issues, a real estate attorney reviewing the documents separately is worth the cost.
Remote closings are routine on the Big Island. Buyers and sellers who are not physically present sign documents via notarized mail-away or remote online notarization. For mainland buyers, this means you do not need to be on the island to close. Our post on how remote closings work for Kona buyers walks through the full process.
Can I do a short-term vacation rental with a Kona property?
Maybe, and the rules are more complicated than most buyers expect. Hawaii County requires a Non-Conforming Use Certificate (NUC) for short-term vacation rentals, meaning stays of less than 180 days, in most residential zoning districts. These certificates were issued under a prior ordinance and are no longer being granted for new locations in most zones. If you want to operate a legal short-term rental in Kona, you need to buy a property that already has a valid, transferable NUC or find one in a zone where short-term rentals are permitted by right, which is limited primarily to resort and hotel zones.
This catches mainland investors off guard more than any other Hawaii-specific rule. A property that looks like a perfect vacation rental on paper may have no legal path to operating as one. Confirm the NUC status and transferability before you write an offer if rental income is part of your purchase rationale. Your agent and the county planning department can help verify this. HOA rules in condo communities add another layer. Some buildings prohibit short-term rentals entirely regardless of county permits.
Is there a spring selling season in Kona?
No. This is one of the most important things to understand about the Kona market if you are coming from a mainland frame of reference. The spring selling season that drives activity in most mainland markets, the surge of listings and buyers from March through June tied to school calendars and weather, does not apply here. Hawaii does not have a winter that drives people indoors and creates pent-up demand for spring. School district boundaries matter to some buyers but are not the primary driver they are in mainland suburbs.
Kona's activity is more influenced by the retirement and relocation buyer cycle, interest rate movements, and inventory. Serious buyers and sellers are active year-round. The notion that you should time your listing for spring or wait out a slow season before buying generally does not hold in this market the way it does elsewhere. What does matter is pricing relative to current closed comps and inventory levels in your specific property type and area.
What should I know about getting a home inspection in Hawaii?
Home inspections are as important in Hawaii as anywhere, and in some respects more so because of conditions that are specific to island living. The things to pay particular attention to: termite and wood-destroying organism reports, which are a separate inspection from the general home inspection and are essentially mandatory for any wood-frame structure in Hawaii; roof condition, because UV exposure, moisture, and salt air shorten roof life faster than most mainland climates; water systems, especially for properties on rain catchment rather than county water; and the condition of any solar installation, including whether permits and interconnection approvals are on file.
For properties in lava zones, some inspectors have specific experience with the additional considerations that apply: insurance requirements, construction materials, and anything related to prior lava activity on the parcel. Ask your agent for inspector recommendations with experience in the specific property type and area you are buying in.
What do I need to know about moving to Hawaii with pets?
Hawaii has the strictest pet importation rules in the United States because it is the only US state that is rabies-free and intends to stay that way. Dogs and cats coming to Hawaii must meet specific requirements involving microchipping, rabies vaccination, rabies antibody titer testing, and a waiting period before arrival. If the requirements are met precisely, pets can be released at the airport. If any step is missed or mistimed, the animal goes into quarantine at the state facility in Oahu, potentially for months.
The timeline to meet requirements and qualify for direct release is a minimum of several months and often longer depending on when the titer test is done and the results. If you are planning a move to the Big Island with dogs or cats, start the process well before you need to travel, not when you book your flights. The Hawaii Department of Agriculture's Animal Industry Division website has the official requirements and the inspection forms you will need. This is one area where the official source is the only source worth trusting because the requirements are precise and the consequences of getting them wrong are significant.
Is 2026 a good time to buy in Kona?
The Kona market in 2026 reflects a more balanced environment than the peak years of 2021 and 2022. Days on market have increased, a higher percentage of properties are closing below list price, and buyers have more room to negotiate than they have had in several years, particularly in the condo market and in the $2 million to $3 million price range for single-family homes. Inventory remains relatively tight compared to historical norms, which has kept prices from falling sharply.
For buyers who have been waiting, 2026 offers more choice, less competition, and a negotiating environment that was essentially nonexistent during the peak years. For sellers, pricing to current closed comps rather than to where the market was in 2022 is the difference between selling and sitting. The market has not collapsed. It has normalized, and normalized markets reward buyers and sellers who come in with realistic expectations and solid preparation.
For the most current data on what is actually happening in the Kona market, see our Kona market reports.
Still Have Questions?
The questions above cover the ones that come up most often, but every transaction has its own specifics. If you have a question about a particular property, a situation that does not fit the standard patterns, or you just want a straight answer from someone who has been through it a few thousand times, reach out to us at Kona Homes for Sale or call 808-854-5432.
Mark Davis, Esq. is a licensed real estate broker (RB-23769) with Kona Homes for Sale at Coldwell Banker Island Properties, Kailua-Kona, Hawaii. He practiced as a transactional and litigation real estate attorney for 35 years before moving to the Big Island full time. He currently serves as a member of the Hawaii County Real Property Tax Board of Appeal.
Brenda Kuessner holds the ABR, CRS, e-PRO, GRI, and GREEN designations and has sold real estate on the Big Island for 35 years. Together they serve buyers and sellers across the Kona and Kohala Coast market. This post is for general informational purposes only and does not constitute legal or tax advice.
