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INSTRUCTIONS STATE OF HAWAII — DEPARTMENT OF TAXATION
FORM N-103
(REV. 2023) INSTRUCTIONS FOR FORM N-103 2023
Sale of Your Home
(NOTE: References to “married” and “spouse” are also references to “in a civil union” and “civil union partner,” respectively.)
termine which property is your main home. While your residence requirement. A vacation or other
General Instructions the most important factor is where you spend the short absence counts as time you lived at home
Note: Act 69, Session Laws of Hawaii 2019, most time, other factors are relevant as well. They (even if you rented out your home while you were
adopts the federal provision that provides a tem- are listed below. The more of these factors that gone).
porary deferral of inclusion in gross income for are true of a home, the more likely that it is your If you become physically or mentally unable
capital gains invested in Qualified Opportunity main home. to care for yourself, you need to show that your
Funds, and permanent exclusion of capital gains
• The address listed on your: home was your residence for only 12 months out
from the sale or exchange of an investment in the
Qualified Opportunity Fund if the investment is 1. U.S. Postal Service address, of the 5 years leading up to the date of sale. In
held for at least 10 years. 2. Voter Registration Card, addition, any time you spent living in a care facil-
3. Federal and state tax returns, and ity (such as a nursing home) counts toward your
Who Must File.—Use Form N-103 to report the residence requirement, so long as the facility has
sale of your main home, whether or not you had a 4. Driver’s license or car registration.
a license from a state or other political entity to
gain from the sale. A loss is not deductible. Attach • The home is near: care for people with your condition.
Form N-103 to Form N-11 or N-15 for the year of 1. Where you work,
sale. 2. Where you bank, Eligibility Step 4—Look-Back
If you are not required to file an income tax re- 3. The residence of one or more family mem- Determine whether you meet the look-back re-
turn for the year of sale, file Form N-103 by itself. bers, and quirement. If you didn’t sell another home during
Send Form N-103 to: 4. Recreational clubs or religious organiza- the 2-year period before the date of sale (or, if you
Hawaii Department of Taxation tions of which you are a member. did sell another home during this period, but you
P. O. Box 3559 Finally, the exclusion can apply to many dif- didn’t take an exclusion of the gain earned from
Honolulu, Hawaii 96811-3559 ferent types of housing facilities. A single-family it), you meet the look-back requirement. You may
If Form N-103 is being filed by itself, enter your home, a condominium, a cooperative apartment, take the exclusion only once during a 2-year pe-
name and address and sign and date the form. a mobile home, and a houseboat each may be a riod.
main home and therefore qualify for the exclusion.
How To Obtain Tax Forms.—To request tax Eligibility Step 5—Exceptions to the
forms by mail, you may call 808-587-4242 or toll- Eligibility Test Eligibility Test
free at 1-800-222-3229. The Eligibility Test determines whether you are eli- There are some exceptions to the Eligibility Test.
Tax forms are also available from the Department gible for the maximum exclusion of gain ($250,000 If any of the following situations apply to you, read
of Taxation’s website at tax.hawaii.gov. or $500,000 if married filing jointly). on to see if they may affect your qualification. If
none of these situations apply, skip to Step 6.
Gain or (Loss), Exclusion, and Eligibility Step 1—Automatic • A separation or divorce occurred during the
Taxable Gain (Part II) Disqualification ownership of the home. See Separated or di-
Does Your Home Sale Qualify for Determine whether the automatic disqualifica- vorced taxpayers.
tion applies. Your home sale is not eligible for the • The death of a spouse occurred during the own-
the Exclusion of Gain? exclusion if you acquired the property through a ership of the home. See Widowed taxpayers.
To qualify for the maximum exclusion of gain like-kind exchange (1031 exchange), during the
• The sale involved vacant land. See Vacant land
($250,000 or $500,000 if married filing jointly) past 5 years. See federal Publication 544, Sales
next to home.
when you sell your main home, you must meet and Other Dispositions of Assets. If this is true, the
the Eligibility Test, explained later. To qualify for a exclusion doesn’t apply. Skip to the Line-by-Line • You owned a remainder interest, meaning the
partial exclusion of gain, meaning an exclusion of Instructions. right to own a home in the future, and you sold
gain less than the full amount, you must meet one that right. See Remainder interest.
of the situations listed in Does Your Home Qualify Eligibility Step 2—Ownership • Your previous home was destroyed or con-
for a Partial Exclusion of Gain?, later. Determine whether you meet the ownership demned. See Home destroyed or con-
Note: You can choose not to take the exclusion requirement. If you owned the home for at least demned—considerations for benefits.
by including the gain from the sale in your gross 24 months (2 years) out of the last 5 years leading • You were a service member during the owner-
income on your tax return for the year of the sale. up to the date of sale (date of the closing), you ship of the home. See Service, Intelligence, and
To do so, complete all the lines in Part I, and lines meet the ownership requirement. For a married Peace Corps personnel.
8 through 12 in Part II. Form N-15 filers should en- couple filing jointly, only one spouse has to meet • You acquired or are relinquishing the home in
ter the gain on the Capital Gain/Loss Worksheet the ownership requirement. a like-kind exchange. See Like-Kind/1031 ex-
in the Instructions for Form N-15. Form N-11 filers Eligibility Step 3—Residence change.
should include the gain on Form N-11, line 10 (if If you were
not already included on Form N-11, line 7). Determine whether you meet the residence re- Separated or divorced taxpayers.
quirement. If you owned the home and used it as separated or divorced prior to the sale of the
Transfer of your home to a spouse or an ex- your residence for at least 24 months of the previ- home, you can treat the home as your residence
spouse. Generally, if you transferred your home ous 5 years, you meet the residence requirement. if:
(or share of a jointly owned home) to a spouse or The 24 months of residence can fall anywhere • You are a sole or joint owner, and
ex-spouse as part of a divorce settlement, you are within the 5-year period. It doesn’t have to be a • Your spouse or former spouse is allowed to
considered to have no gain or loss. single block of time. All that is required is a total live in the home under a divorce or separation
Sale of your main home. You may take the exclu- of 24 months (730 days) of residence during the agreement and uses the home as his or her
sion, whether maximum or partial, only on the sale 5-year period. Unlike the ownership requirement, main home.
of a home that is your principal residence, mean- each spouse must meet the residence require- If your home was transferred to you by a
ing your main home. An individual has only one ment individually for a married couple filing jointly spouse or ex-spouse (whether in connection with
main home at a time. If you own and live in just to get the full exclusion. a divorce or not), you can count any time when
one home, then that property is your main home. If you were ever away from home, you need your spouse owned the home as time when you
If you own or live in more than one home, then you to determine whether that time counts towards
must apply a “facts and circumstances” test to de-

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INSTRUCTIONS
FORM N-103 (REV. 2023) Page 2

owned it. However, you must meet the residence cy, or the National Reconnaissance Of- Also, if your sale of vacant land meets all these
requirement on your own. fice; requirements, you must treat that sale and the
Widowed taxpayers. If you are a widowed tax- b. Any other office within the Department of sale of your home as a single transaction for tax
payer who doesn’t meet the 2-year ownership and Defense for the collection of specialized purposes, meaning that you may apply the exclu-
residence requirements on your own, consider national intelligence through reconnais- sion only once.
the following rule. If you sell your home within 2 sance programs; However, if you move your home from the land
years of the death of your spouse and you haven’t c. Any of the intelligence elements of the on which it stood (meaning you relocate the ac-
remarried at the time of the sale, then you may in- Army, the Navy, the Air Force, the Ma- tual physical structure), then that land no longer
clude any time when your late spouse owned and rine Corps, the Federal Bureau of Inves- counts as part of your home. For example, if you
tigation, the Department of Treasury, the move a mobile home to a new lot and sell the old
lived in the home, even if without you, to meet the Department of Energy, and the Coast
ownership and residence requirements. Guard; lot, you cannot treat the sale of the old lot as the
sale of your home.
Also, you may be able to increase your exclu- d. The Bureau of Intelligence and Re-
sion amount from $250,000 to $500,000. You may search of the Department of State; or Home destroyed or condemned—consider-
take the higher exclusion if you meet all of the fol- e. Any of the elements of the Department ations for benefits. If an earlier home of yours
lowing conditions. of Homeland Security concerned with was destroyed or condemned, you may be able to
1. You sell your home within 2 years of the the analyses of foreign intelligence in- count your time there towards the ownership and
death of your spouse; formation. residence test.
2. You haven’t remarried at the time of the Period of suspension. The period of suspen- If your home was destroyed, see federal Pub-
sale; sion cannot last more than 10 years. Together, the lication 547, Casualties, Disasters, or Thefts. If
3. Neither you nor your late spouse took the 10-year suspension period and the 5-year test pe- your home was condemned, see federal Publica-
exclusion on another home sold less than riod can be as long as, but no more than, 15 years. tion 544.
2 years before the date of the current home You cannot suspend the 5-year period for more Remainder interest. The sale of a remainder
sale; and than one property at a time. You can revoke your interest in your home is eligible for the exclusion
4. You meet the 2-year ownership and resi- choice to suspend the 5-year period at any time. only if both of the following conditions are met.
dence requirements (including your late
spouse’s times of ownership and residence Example 1. Mary bought a home on May 1, • The buyer isn’t a “related party.” A related party
if need be). 2007. She used it as her main home until August can be a related person or a related corpora-
27, 2010. On August 28, 2010, she went on quali- tion, trust, partnership, or other entity which you
Service, Intelligence, and Peace Corps per- fied official extended duty with the Navy. She did control or in which you have an interest.
sonnel. If you or your spouse are a member of not live in the house again before selling it on
the Uniformed Services or the Foreign Service, August 1, 2023. Mary chooses to use the entire • You haven’t previously sold an interest in the
or an employee of the intelligence community in 10-year suspension period. Therefore, the sus- home for which you took the exclusion.
the Unites States, you may choose to suspend pension period would extend back from August 1, Like-Kind/1031 exchange. If you sold a home
the 5-year test period for ownership and residence 2023, to August 2, 2013, and the 5-year test pe- that you acquired in a like-kind exchange, then the
when you are on qualified official extended duty. riod would extend back to August 2, 2008. During following test applies.
This means you may be able to meet the 2-year that period, Mary owned the house all 5 years and You can’t claim the exclusion if:
residence test even if, because of your service, lived in it as her main home from August 2, 2008, 1. Either a. or b. applies:
you did not actually live in your home for at least until August 28, 2010, a period of more than 24 a. You acquired your home in a like-kind
the 2 years during the 5-year period ending on the months. She meets the ownership and use tests exchange (also known as a section
date of sale. because she owned and lived in the home for at 1031 exchange), or
Qualified extended duty. You are on qualified least 2 years during this test period. b. Your basis in your home is determined
extended duty if: Example 2. John bought and moved into a by reference to a previous owner’s ba-
• You are called or ordered to active duty for an home in 2014. He lived in it as his main home for sis, and that previous owner acquired
indefinite period, or for a definite period of more 3-1/2 years. For the next 6 years, he did not live the property in a like-kind exchange (for
than 90 days. in it because he was on qualified official extended example, the owner acquired the home
and then gave it to you); and
• You are serving at a duty station at least 50 duty with the Army. He then sold the home at a
miles from your main home, or you are living in gain in 2023. To meet the use test, John chooses 2. You sold the home within 5 years of the
date your home was acquired in the like-
government quarters under government orders. to suspend the 5-year test period for the 6 years kind exchange.
• You are one of the following: he was on qualified official extended duty. This
1. A member of the armed forces (Army, Navy, means he can disregard those 6 years. Therefore, For more information about like-kind exchanges,
Air Force, Marine Corps, Coast Guard); John’s 5-year test period consists of the 5 years see federal Publication 544.
2. A member of the commissioned corps of before he went on qualified official extended duty. If you relinquished your home in a like-kind ex-
the National Oceanic and Atmospheric Ad- He meets the ownership and use tests because change, then you should determine if you qualify
ministration (NOAA) or the Public Health he owned and lived in the home for 3-1/2 years to exclude gain as you would if you sold the home.
Service; during this test period. Under certain circumstances, you may meet the
3. A Foreign Service chief of mission, ambas- Vacant land next to home. You can include the requirements for both the exclusion of gain from
sador-at-large, or officer; sale of vacant land adjacent to the land on which the exchange of a main home and the nonrecog-
4. A member of the Senior Foreign Service or your home sits as part of a sale of your home if nition of gain from a like-kind exchange. For more
the Foreign Service personnel; ALL of the following are true. information, see Revenue Procedure 2005-14,
2005-7 I.R.B. 528.
5. An employee, enrolled volunteer, or en- • You owned and used the vacant land as part of
rolled volunteer leader of the Peace Corps
serving outside the United States; or your home. Eligibility Step 6— Final Determination
6. An employee of the intelligence community, • The sale of the vacant land and the sale of your of Eligibility
meaning: home occurred within 2 years of each other. If you meet the ownership, residence, and look-
a. The Office of the Director of National • Both sales either meet the Eligibility Test or back requirements, taking the exceptions into
Intelligence, the Central Intelligence qualify for partial tax benefits, as described ear- account, then you meet the Eligibility Test. Your
Agency, the National Security Agency, lier. home sale qualifies for the maximum exclusion.
the Defense Intelligence Agency, the Skip to the Line-by-Line Instructions.
National Geospatial-Intelligence Agen-

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INSTRUCTIONS
Page 3 FORM N-103 (REV. 2023)

If you didn’t meet the Eligibility Test, then your 2. Became divorced or legally separated; Individuals who purchased residential property
home isn’t eligible for the maximum exclusion, but 3. Gave birth to two or more children from the before January 1, 1990, with a distribution from
you should continue to Does Your Home Qualify same pregnancy; an IHA must include in gross income in the year
for a Partial Exclusion of Gain? 4. Became eligible for unemployment com- the property is sold, conveyed, or transferred an
pensation; amount equal to the amount of the distribution, un-
Does Your Home Qualify for a 5. Became unable, because of a change in less an election was made to include one-tenth of
Partial Exclusion of Gain? employment status, to pay basic living the distribution in gross income each year for ten
If you don’t meet the Eligibility Test, you may still expenses for the household (including ex- years.
qualify for a partial exclusion of gain. You can penses for food, clothing, housing, medica-
meet the requirements for a partial exclusion if the tion, transportation, taxes, court-ordered Individuals who purchase residential property
payments, and expenses reasonably nec- after December 31, 1989 shall include in gross
main reason for your home sale was a change in essary for making an income). income one-tenth of the distribution each year for
workplace location, a health issue, or an unfore- ten years. If such individual sells the property pur-
seeable event. An event is determined to be an unforeseeable
event in IRS published guidance. chased with an IHA distribution before the end of
the ten-year period, the remaining amount of the
Work-Related Move Other Facts and Circumstances distribution not previously reported shall be includ-
You meet the requirements for a partial exclusion Even if your situation doesn’t match any of the ed in gross income in the year of sale.
if any of the following events occurred during your standard requirements described above, you still Individuals who purchase residential property
time of ownership and residence in the home. may qualify for an exception. You may qualify if after December 31, 1996, with a distribution from
• You took or were transferred to a new job in you can demonstrate the primary reason for sale, an IHA established prior to January 1, 1990, and
a work location at least 50 miles farther from based on facts and circumstances, is work-relat- who have made the election to do so, shall include
home than your old work location. ed, health-related, or unforeseeable. Important in gross income in the year the property is sold,
• You had no previous work location and you be- factors are: conveyed, or transferred an amount equal to the
gan a new job at least 50 miles from the home. • The situation causing the sale arose during the amount of the distribution.
• Either of the above is true of your spouse, a co- time you owned and used your property as your Enter on line 5 the total amount of the IHA dis-
owner of the home, or anyone else for whom residence. tribution.
the home was his or her residence. • You sold your home not long after the situation Line 6—Enter on this line the amount of the IHA
arose.
Health-Related Move distribution not previously reported. Also include
• You could not have reasonably anticipated the this amount on Form N-11, line 10, or Form N-15,
You meet the requirements for a partial exclu- situation when you bought the home. line 19. Identify this amount as “IHA distribution
sion if any of the following health-related events
occurred during your time of ownership and resi- • You began to experience significant financial reported on sale of property.”
dence in the home. difficulty maintaining the home. Line 7—Section 235-5.5(f), HRS, also requires
• You moved to obtain, provide, or facilitate diag- • The home became significantly less suitable that 10% (.10) of the IHA distribution used to pur-
nosis, cure, mitigation, or treatment of disease, as a main home for you and your family for a chase residential property be added to the indi-
illness, or injury for yourself or a family member. specific reason. vidual’s gross income or tax liability upon the sale,
conveyance, or transfer of the property if the total
• You moved to obtain or provide medical or per- Line-by-Line Instructions IHA distribution was not previously reported. On
sonal care for a family member suffering from a Line 1—Enter the date of sale. If you received a line 7, enter 10% (.10) of line 5.
disease, illness, or injury. Family includes your: federal Form 1099-S, Proceeds From Real Estate The following individuals shall add 10% of the
1. Parent, grandparent, stepmother, stepfa- Transactions, the date of sale should be shown in IHA distribution to their gross income:
ther; box 1. If you did not receive a federal Form 1099- 1. Individuals who purchased residential prop-
2. Child (including adopted child, eligible fos- S, the date of sale is the earlier of (a) the date erty before January 1, 1990, and who have not
ter child, and stepchild), grandchild; the title transferred, or (b) the date the economic made the election to report the distribution as
3. Brother, sister, stepbrother, stepsister, half- burdens and benefits of ownership shifted to the gross income over a ten-year period, and
brother, half-sister; buyer. 2. Individuals who purchased residential prop-
4. Mother-in-law, father-in-law, brother-in-law, erty after December 31, 1996, with a distribu-
sister-in-law, son-in-law, daughter-in-law; Line 2—If part of your main home was rented out
5. Uncle, aunt, nephew, or niece. or used for business and in the year of sale you tion from an IHA established prior to January
1, 1990, and who made the election to report
were not entitled to deduct expenses for the part the distribution as gross income at the time the
• A doctor recommended a change in residence that was rented or used for business, report the property is sold.
for you because you were experiencing a entire sale on Form N-103.
health problem. Include this amount on Form N-11, line 10, or
If you were entitled to deduct expenses in the Form N-15, line 19. Identify this amount as “10%
• The above is true of your spouse, a co-owner of year of sale for the part that was rented or used for penalty on IHA distribution.”
the home, or anyone else for whom the home business, treat the sale as two separate sales. Re-
The following individuals shall add 10% of the
was his or her residence. port on Hawaii Schedule D-1 the part of the sale
Unforeseeable Events that applies to the rental or business use. Report tax liability:
IHA distribution to their
You meet the standard requirements if any of the on Form N-103 only the part of the sale that repre- 1. Individuals who purchased residential property
after December 31, 1989, except for individu-
following events occurred during the time you sents your main home. You must allocate between als who purchased residential property after
owned and lived in the home you sold: Form N-103 and Hawaii Schedule D-1 the sales December 31, 1996, with a distribution from an
price, expenses of sale, and the adjusted basis of IHA established prior to January 1, 1990, and
• Your home was destroyed or condemned. the property sold. Attach a statement showing the who made the election to report the distribu-
• Your home suffered a casualty loss because of total selling price of the property and the method tion as gross income at the time the property
a natural or man-made disaster or an act of ter- used to allocate the amounts between the two is sold.
rorism. (It does not matter whether the loss is forms. Include this amount on Form N-11, line 27, or
deductible on your tax return.) Section 235-5.5(f), HRS, requires that Form N-15, line 44 and fill in the oval indicating
Line 5—
• You, your spouse, a co-owner of the home, or the amount received as a distribution from an IHA that you are including the separate tax from Form
anyone else for whom the home was his or her which was used to purchase a residential property N-103.
residence: in Hawaii be included in the gross income of the
1. Died; individual.

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INSTRUCTIONS
FORM N-103 (REV. 2023) Page 4

Line 8—Sale Price of Home.—Enter the sale es include commissions, advertising, attorney and and look-back requirements, taking the excep-
price of your home. This includes money, the val- legal fees, appraisal fees, title insurance, transfer tions into account.
ue of any notes, mortgages, or other debts that and stamp taxes, and recording fees. Loan charg- If you qualify to claim a partial exclusion, use
the buyer agreed to assume as part of the sale, es, such as points charged to the seller, are also the Find Your Exclusion Limit Worksheet in federal
and the fair market value of any other property or selling expenses. Do not include fixing-up expens- Publication 523 to figure the amount to enter on
services you received. es on this line. line 20.
If you received federal Form 1099-S, box 2 Line 11—Adjusted Basis of Home Sold.—See Line 22—Taxable Gain.—If you are reporting the
(gross proceeds) should show the total amount federal Publication 523 to figure the adjusted ba- sale on the installment method, see federal Pub-
you received for your home. However, box 2 does sis of the home you sold. lication 523. Form N-15 filers should enter this
not include the fair market value of other property If you were a nonresident of Hawaii when you amount on the Capital Gain/Loss Worksheet in
or services you received or will receive. Instead, purchased your old Hawaii home, do not reduce the Instructions for Form N-15. Form N-11 filers
box 4 will be checked to indicate your receipt or the basis of the old home by any gain on the sale should include the gain on Form N-11, line 10 (if
expected receipt of these items. of a prior home which was located outside of Ha- not already included on Form N-11, line 7).
Do not include amounts you received for per- waii. Note: If you elect to defer tax on your eligible gain
sonal property sold with your home. Personal Line 20—Maximum Exclusion.—Enter by investing in a Qualified Opportunity Fund, re-
property is property that is not a permanent part of $250,000 ($500,000 if married filing a joint return) port the eligible gain on federal Form 8949, Sales
the home. Examples are furniture, draperies, rugs, if during the 5-year period ending on the date of and Other Dispositions of Capital Assets. For
a washer and dryer, and lawn equipment. the sale, you have met the ownership, residence, more information, see the Instructions for federal
Line 9—Selling Expenses.—Enter the total ex- Form 8949.
penses you paid to sell your home. These expens-

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