The governor of Hawaii released $8 million last Monday to purchase 77 acres of land for the proposed 215,000 sq ft, 1,600 student high school.  The school will be located on the mauka side of the Piilani Highway near Kulani Hakoi in North Kihei.  The process of construction is slated to be the previously successful “design build” method where a developer builds the school, then leases it to the State Department of Education until paid off in 20 to 30 years.  This project whould be a huge boost to the Kihei/Wailea area in the construction industry, stature of the community and convenience to the families in the area.

Here is an interesting article by Steven M. Sears for Barron’s Online at Barrons.com

BARRON’S

o N liN E

I MONDAY, MARCH 8, 2010

BARRON’S COVER

10 Best Places for Second Homes

AT LONG LAST, THE MARKET FOR LUXURY

REAL estate is coming back to life.

Prices for primary residences, which plunged at least 20% from the peak in 2007, appear to have bottomed. In some of the snappiest locations, scattered bidding wars are breaking out and prices are turning upward.  In Greenwich, Conn., realty brokers say, the final months of 2009 were almost record-setters for sales volume, as two years of pent-up demand was unleashed. Even the megadeal is back. In Beverly Hills, film producer Jeffrey Katzenberg just plunked down $35 million for an 8,700-square-foot home on six acres.  There’s nothing like a stabilized economy and a huge rebound in stocks to send folks looking for the perfect manse. The return of hefty Wall Street bonuses hasn’t hurt, either.

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With all that in mind, and with summer just around the corner, Barron IS sized up the market for upscale second homes, one of the greatest luxuries of all. We scoped out dozens of deluxe enclaves across the country, speaking with brokers, homeowners and others. Our conclusion:

Now could be an excellent time to buy.

Prices are way down — 40% off the peak in some locations. Seemingly at or near bottom, they are starting to attract the first wave of bargain hunters — and not just families in need ofR&R.

Hard-nosed investors also are on the prowl, says Jan Reuter, head of residential real estate at U.S.Trust Bank of America Private Wealth Management: “We’ve seen an uptick in buying in just the last couple of months.”

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BARRON’S

Q N LIN E

More Penta Articles

To help you in the hunt, Barron’s has selected the

10 best places in America for second homes.

These alluring locales have it all: gorgeous houses, spectacular views, world-class golf, fishing and skiing, fine dining and great shopping. You’ll find the complete range of lifestyles, from peaceful and easy to vigorously social.

Some warnings: 1) Our selections are every bit as subjective as tastes in homes themselves. 2) The prices cited are based mainly on conversations with locals, because hard data isn’t available. 3)Your plush new retreat may take some time to rise in value. Serious appreciation will require a better economy and, quite possibly, another big rally in stocks.  But hey, you could do worse than marking time in paradise.

1. Maui Consistently rated the “Best Island in the World” by travel experts, this Hawaiian beauty underwent a growth spurt during the past decade that some critics bemoaned as excessive. But the southern coast, anchored by the hamlet of Wailea, has weathered it all well. One of the first masterplanned resort communities in the nation, it’s a balanced blend of understated gated communities,  luxury resort hotels, three excellent golf courses, a tennis center and, of course, several crescent sandy beaches. Wailea has 500 single-family homes, and their views are stunning: lush, verdant hills, brilliantly blue ocean and, after the steamy sun showers, rainbows over the horizon.

Median Price: $l.5 million

Drop From Peak: 27%

Neighbor: Oprah Winfrey

2. Kiawah Island, S.C. Languid elegance defines South Carolina’s coast, and Kiawah, just off Charleston, may be its ideal expression. The island has one developer, Kiawah Development Partners, and an architectural review board that protects the 4,500 or so properties from the excesses often seen when wealth meets water. It has 10 miles of hard-sand beaches and abundant wildlife: bobcats, gray foxes, loggerhead turtles and more. Its Ocean Course has long been favorite of golfers; it hosted the 2007 Senior PGA Championship. Want to tee up some culture? Charleston is just 45 minutes away.

Median Price: $1.4 million

Drop From Peak: 21 %

Neighbor: Dan Marino

3. The Hamptons Long the favored retreat of high-powered New Yorkers, the Hamptons are a just now experiencing a fresh jump in home sales, realty brokers say. Credit the revival in Wall Street bonuses. Southampton, bastion of old money, is known for its grand estates, but lovely homes can be found in what not long ago were potato fields.  In chic East Hampton, the choicest real estate is on Georgica Pond. Alas, most of the area’s finest properties never come to market. Once you own a home in the Hamptons, you own it forever.

Median Price: $1.5 million

Drop from Peak: 30%

Neighbor: Steven Spielberg4. Park City, Utah Skiers love Park City for its powdery winters, but homeowners relish the summers, too. The crowds thin out, life slows down and the tall aspens lining the nearby Wasatch range shimmer in the breeze. The onestreet Old West downtown is dotted with classic Victorian houses, while Deer Valley, an understated year-round resort community, sits on the eastern edge. Its namesake ski hill has been crowned by readers of Ski Magazine as North America’s top ski resort for three years running. For $100,000, you can join the nearby Talisker Club, with links designed by PGA Tour Champion Mark O’Meara. Bonus: Salt Lake City International Airport, a Delta Air Lines hub, has direct flights to the East and West Coasts.

Median Price: $1 million

Drop From Peak: 45%

Neighbor: Robert Redford

BJ Adams and Co. Real Estate

5. Aspen, Colo. Aspen isn’t just a year-round playground; it’s also a cultural oasis, the home to the Aspen Institute think tank, a world-class symphony, and dance and art festivals. The four major ski hills speak for the themselves. The Maroon Creek Club includes a challenging golf course designed by Tom Fazio. The city’s West End has a mix of 19th-century Victorians and modem abodes not far from the “beachfront” -downtown neighborhoods within walking distance of the lift. The posh shopping is so good that some folks never find their way up to the trails.

Median Price: $5.6 million

Drop From Peak: 6%

Neighbor: Jack Nicholson

6. Pebble Beach, Calif. Golfer Jack Nicklaus once said that if he had one last round to play before he died, it would be at Pebble Beach. The site of four U.S. Opens, The Links are rated the No.1 public course in America by Golf Digest for 2009-10.  There are several other public and private golf courses within the guarded gates of the verdant Del Monte Forest, which surrounds the community of Pebble Beach. Stunning estates not far from the first tee offer sweeping views of Monterey Bay. Duffers who buy in can play the Golden Bear’s dream course every day.

Median Price: $1.1 million

Drop Since Peak: 20%

Neighbor: Clint Eastwood.

7. Palm Beach This Florida island hovers above reality, and at $30 million-plus, so do its finest pads. Oodles of socialites and tycoons wouldn’t have it any other way. Neither would Jimmy Buffett, Rush Limbaugh and too many other boldface names to mention. In addition to the never-ending social whirl, residents like the shopping on W orth Avenue and the beauty of Addison Mizner’s Mediterranean-style architecture. Mortals can enjoy the town by buying “over the moat” — in Jupiter, North Palm Beach, Palm Beach Gardens and Delray Beach.

Median Price: $3.5 million

Drop From Peak: 11 %

Neighbor: Henry Kravis

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Sotheby’s Inti Realty

8. Captiva/Sanibel Island, Fla. Sitting off the coast of Fort Myers, a nerve center of America’s foreclosure crisis, the barrier islands of Capti va and Sanibel are the very picture of laid-back living.  Linked by a bridge at Sanibel’s northern point, the islands are renowned for their pristine beaches and abundant seashells. Then there are the hiking trails; half the island is a nature preserve. The late Robert Rauschenberg is, even in death, one of the largest landowners. His 35-acre spread, complete with studio, is intact on Captiva’s northern end.  Barron’s Penta inaugural list of second-home communities from the Hamptons to Hawaii.

Median Price: $3.5 million

Drop From Peak: 40%

Neighbor: Ted Koppel

9. Asheville, N.C. Nestled in the mountains of North Carolina, Asheville offers a four-seasons lifestyle with just enough culture and good restaurants to keep urban-withdrawal pangs at bay. Some homebuyers come from the Northeast, and many come from Florida to beat the heat. The locals call them “halfbacks,” since Asheville is halfway up the East Coast. The town has a university and a thriving art scene. We like the 1 920s-vintage Tudor homes in the Biltmore Forest district, once part of the adjacent Biltmore Estate.  The funky Grove Park neighborhood is also worth a look.

Median Price: $700,000

Drop From Peak: 38%

Neighbor: Andie McDowell

Gasparilla Properties

10. Gasparilla Island, Fla. Katherine Hepburn used to rent a beach house here, and it’s easy to see why. The small island off Florida’s southwest coast has been lovingly preserved: The Gasparilla Act, a state law passed in 1980, put a tight lid on population density, building heights and commercial development. Golf carts — some customized to resemble ’57 Chevys — are the favored mode of transportation. The historic downtown has gracious homes, and the waters around the island are renowned for tarpon fishing.  To check it out, check into the plush Gasparilla Inn.

Median Price: $1.8 million.

Drop From Peak: 18%

Neighbor: Harrison Ford, frequent visitor.

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Following is information provided by Richard Frunzi for informational purposes for Canadians Acquiring or Selling Real Property in Hawaii. We will be adding a tab to our website with additional information on this topic as well as Foreign Investors Acquiring or Selling Real Property in Hawaii shortly. Please look for it soon.

© 2010 Richard L. Frunzi

385 Hukilike Street • Suite 210 • Kahului • Maui • Hawaii • 96732 • (808) 873-5900 • (808) 873-7662 fax
frunzi@frunzi.net •

Business and Tax Consulting

Issues in Dealing with Canadian Citizens
Who Acquire or Sell Real Property in Hawaii

As with many tax concerns affecting real estate, its acquisition, its ownership and its
disposition, the issues are magnified when dealing with citizens of foreign countries. The issues
relating to how we should handle purchases, management or sales of Hawaii real estate when
dealing with our neighbors directly north of us in Canada are unique and often not fully understood
by the Hawaii professionals with whom they may be dealing. How a Canadian owning real property
in Hawaii will be taxed for U.S. income tax purposes depends in great part on the status of such
individual as such is determined by the IRS. Remember, as a general rule, the United States
Treasury Department cares little about how the Canadian Revenue Agency classifies a Canadian
citizen for either residency or immigration purposes.
1. What/Who is a Canadian (or Better Stated, Who is a United States Resident)?
a. Rule For Immigration Versus Tax Purposes. The test of whether an individual is
considered a resident of the United States differs depending upon whether the discussion is about
income taxation, estate taxation or immigration. While it may be very difficult for a citizen of
Canada to be treated as a resident for U.S. immigration purposes, and fairly difficult for such person
to be considered a resident for U.S. federal estate tax purposes, it is relatively easy (and in many
cases, even inadvertent) as to how a Canadian citizen can become treated as a resident of the United
States for federal income tax purposes.
b. True Canadian Citizenship Versus Dual Citizenship. Not all Canadian citizens
are, however, created equal. While most citizens of Canada will hold citizenship only in Canada (or
in Canada and some third country other than the United States, there is a growing group of
individuals that hold citizenship in both the United States and Canada. These dual citizens are
automatically considered U.S. taxpayers for United States’ federal income tax purposes.
2. How Does a Canadian Inadvertently Become a U.S. Taxpayer? Increasingly, we see
Canadian citizens inadvertently becoming U.S. taxpayers without intending to make such an
adjustment in their status for U.S. tax purposes. If a Canadian citizen fails either of the two tests
that are currently in use under United States tax law to determine his or her status for the income
tax purposes, then they will be considered for income tax purposes to be a United States resident.
The two tests are the “Green Card” test and the “Substantial Presence” test (sometimes
referred to as simply the “presence” test). These two tests are what the United States taxing
authority, called the Internal Revenue Service (or IRS for short) use to determine if an individual is a
U.S. taxpayer for United States income tax purposes. There is currently a treaty between the United
Canadian Investment in Hawaii Real Estate Page 2

States and Canada that provides some guidance on this issue, but in essence, if a Canadian citizen
either obtain a green card or fail the presence test, he or she would be considered to be a United
States taxpayer for income tax purposes.1 Becoming a U.S. taxpayer for income tax purposes would
mean that such individual would essentially be taxable for U.S. income tax purposes on his or
her worldwide income, regardless of in what country such income is earned or paid.
a. Green Card Test. The Green Card Test is fairly easy to identify and understand – if
a Canadian citizen has a United States green card for permanent resident status (the original color of
the card granted by the U.S. government to individuals who became permanent residents of the
United States) – then he or she is considered to be a resident of the U.S. for income tax purposes.
b. Substantial Presence or Presence Test. Unfortunately, the Substantial Presence
Test is more complicated. Under the Substantial Presence Test, a foreign national will be deemed a
resident for tax purposes if he or she has been in the United States for 31 days during the present
year and at least 183 days during the present year and the preceding two years, with each day in the
present year counting as a full day, each day in the immediate prior year counting as 1/3 of a day
and each day in the second prior year counting as 1/6 of a day. To illustrate graphically:

Year Days Stayed in
United States Multiplier Test
Amount
Current Year 1
Previous Year 1/3
Two Years Ago 1/6
Total

Under the formula above, if, when multiplied by the number of days for each the current
year for which a person is attempting to determine if he or she have failed the test and the two years
immediately preceding that year, the total number of days such person has stayed (or are going to be
staying) in the United State is greater than 183, then such person will be considered a resident for
U.S. income tax purposes and subject to U.S. income tax on their worldwide income unless there is
an exception for such party’s situation. This test must be applied for each year in which a non-U.S.
citizen is present in the United States.
Under the treaty between the United States and Canada, the test is a little more relaxed since
even where an individual who is considered a resident under the substantial presence test, if (a) he
or she is not present in the United States for 183 days or more during the current year, (b) that
person is not treated as a resident if he has a “tax home” in a foreign country and (c) has a closer

1
Note that becoming a United States taxpayer for income tax purposes is different than becoming a United
States taxpayer for estate tax purposes and much different than becoming a U.S. resident for immigration
purposes. In fact, it is not uncommon to become a U.S. taxpayer while not being a resident for immigration
purposes. Not better or worse, simply different.

Canadian Investment in Hawaii Real Estate Page 3

connection to the foreign country than to the United States, under the “Closer Connection
Exemption,” the United States will not treat that person as a United States taxpayer.2
3. Taxation of Canadians in the United States Generally.
a. What Does it Mean if a Canadian Citizen is a U.S. Resident For Income Tax
Purposes? Once the foreign national is classified as a resident of the U.S., under its current tax
structure, the IRS will hold such foreign national’s worldwide income subject to income taxation by
the United States. This, however, is where the income tax Treaty between the United States and
Canada can come to one’s rescue. Under the Treaty, each Canada and the United States have
agreed that income generated in the host country will be taxable in that country first. The non-
source country (the one where the income was not generated) then, pursuant to the terms of the
Treaty, grants in most instances an income tax credit for the tax paid in the source country on such
income. While these credits do not always match up in terms of income and/or timing, they can go
a long way towards providing shelter for those individuals that have income in both countries.
b. Why is it Better to Not Be a U.S. Resident For Income Tax Purposes? If, on
the other hand, that individual does not meet either test (or is protected by the Closer Connection
Exemption), he or she will remain a nonresident shielding all non-United States source income from
taxation by the United States, leaving on his or her U.S. source income subject to tax by the IRS, the
U.S. taxing authority. Stated in different words, a nonresident alien Canadian citizens taxed on all
income from within the United States or all United States source income. Income from within the
United States or United States source income is generally considered to be income that is produced
by an activity or an investment in the United States. The tax imposed on such income will depend
on whether the amount received is or is not effectively connected with the conduct of a trade or
business within the United States.
4. Taxation of Real Property Owned By Canadian Citizens. As noted above, the tax owed
to the United States government by a Canadian national who is not a resident of the U.S. for
income tax purposes will depend upon its status as to whether it is effectively connected with a
trade or business or not. Where income is not effectively connected with the conduct of a trade or
business, as a general rule, a non-resident taxpayer earning such revenue is required to have a flat
withholding tax of thirty percent (30%) of the gross revenue earned from and as a result of such
activities, in other words, the rents received. Note below, though, that the Canada/U.S. Tax Treaty
modifies the withholding with respect to certain types of income received by Canadian citizens who
are not U.S. taxpayers for U.S. income tax purposes.
As a general rule, income in divided into two parts:
a. Income NOT Effectively Connected With the Conduct of a Trade or Business
Within the United States. The Code categorizes four types of income as not effectively connected
with the conduct of a trade or business. The categories are:

2
In order to take advantage of the closer connection exemption, it is important that any individual who
would otherwise fail the substantial presence test consider filing IRS Form 8840, The Closer Connection
Exception Statement no later than June 15th of the year following the year at issue. It is important to
understand that to qualify for the Closer Connection Exemption, the United States Internal Revenue Service
(IRS) will consider a number of factors in determining whether a taxpayer qualifies for the exemption,
including the location of the visitor’s home, family, personal belongings, routine banking activities and
organizations to which he or she belongs.
Canadian Investment in Hawaii Real Estate Page 4

1. Fixed or determinable, annual or periodical gains, profits and income, such as
interest, dividends, rents, royalties, wages, premiums, annuities, compensation,
remunerations, and emoluments.
2. Capital gains.
3. Special statutory gain income such as capital gain distribution from employee
trusts, gains from the sale of patents, copyrights and original issue discount.
4. One-half of social security benefits.
Although interest income is considered fixed or determinable, annual or periodic income,
and subject to a flat tax rate, the Tax Reform Act of 1986 excluded interest on United States bank
deposits from United States taxation for foreign taxpayers if it is not effectively connected with the
conduct of trade of business. Code 871(i), 881(d).
Another exemption to nonresident individuals not engaged in a trade or business in the
United States are gains from the sale of personal property. Generally, foreign taxpayers will not
recognize gains from the sale of personal property. An exception to the rule is that if the
nonresident individual is physically present in the United States for 183 days or more in the taxable
year, a flat tax rate of 30% is imposed. Code 871(a)(2).
The four general categories of income not effectively connected with the conduct of a trade
or business are subject to a flat tax rate of 30 percent with no deductions allowed, except that the
U.S.-Canadian Tax Treaty provides:
A. Dividends for Canadian citizens who are nonresidents for U.S. income tax
purposes will only pay a 15% reduced withholding rate, provided they file IRS Form W-8BEN.
B. Capital gains on the sale of United States securities by Canadian citizens who
are nonresidents for U.S. income tax purposes are exempt from U.S. capital gains, again provided
they file IRS Form W-8BEN.
b. Income Effectively Connected With the Conduct of a Trade or Business
Within the United States. A nonresident alien from Canada engaged in a trade or business within
the United States shall be taxed on his taxable income which is effectively connected with the
conduct of a trade or business within the United States. Income which arises from assets used in or
from activities from a trade or business and connected with a United States trade or business is
considered effectively connected with the conduct of a trade or business. Examples of income
effectively connected with a trade or business include:
1. Compensation for personal services rendered in the United States.
2. Income derived from a partnership, if the partnership is engaged in a trade or
business in the United States.
3. Real property rental income.
4. Business operations.
If a nonresident individual must recognize gain or loss from the sale of real property in the
U.S., such gain shall be recognized as income effectively connected with the conduct of a trade or
business within the United States. Code 897(a). Income which is effectively connected with the
Canadian Investment in Hawaii Real Estate Page 5

conduct of a trade or business in the United States is subject to a regular graduated income tax rate.
A nonresident may deduct expenses that are connected with the conduct of a trade or business.
5. Ownership Structuring. Structure is often an issue that must be dealt with by Canadian
purchasers. As a first rule, in the past it was common for Canadian purchasers to request that their
Hawaii real property be titled in the name of a Canadian company, often a corporation or other
limited liability entity. This is definitely no longer advantageous and should be avoided at all costs.
What kinds of ownership are recommended? While tenants by the entirety, joint tenants and
tenants in severalty are acceptable, probate in the United States is much more complicated when
dealing with a Canadian citizen who has passed away. Therefore:
a. Living Trusts. Revocable Trusts are popular, but beware that in many instances
revocable trusts created in Canada are not the same as revocable trusts here and if substantial value
is present, it would not be inappropriate to recommend a separate revocable trust to hold U.S. real
property.
b. LLCs. More and more, you see Canadian citizens acquiring their Hawaii real estate
in LLCs. Besides the obvious ability to limit their personal exposure with respect to liability that
might arise from the ownership and/or operation of such real property, the ownership through an
LLC offers ease in effecting transfers amongst family and friends. In situations where more than a
single parcel of real property in Hawaii is owned, it is not uncommon to use a structure whereby
there is a parent LLC that owns subsidiary LLCs, with each separate property residing in its own
subsidiary LLC as follows:

With such a structure, even though there is no additional tax filings for a single owner, a
single bank account at the parent LLC level with one general liability policy at the parent level
naming each subsidiary LLC as additional insureds can greatly reduce the costs of operations.
6. Selling Real Property. The rules for selling real property (except to their detriment, for
those Canadian citizens who trapped their real property in corporations that pay their own taxes and
to their benefit for taxpayers from Canada that owned property with gain before 1980 and had gains
before 1985) is similar to those rules dealing with all foreigners. HARPTA and FIRPTA will apply
in almost all situations.
7. What Does All This Mean For a Canadian Who is Purchasing Real Property?
a. Escrow. If there is a substantial deposit that is to be made to escrow by a Canadian
nonresident to purchase real property in Hawaii, urge them to file IRS Form W-8BEN with the
escrow company to exempt any interest income earned on the escrow funds from withholding.
This form is only filed with payors such as banks and escrow companies and not with the IRS.
b. Rental Income/Improvement/Expense Bank Accounts. When acquiring real
property in the United States, it is not uncommon for Canadian citizens to open a bank or
Canadian Investment in Hawaii Real Estate Page 6

brokerage account in which they may want to keep some funds, whether for real property for their
own account or for rental. Once again, urge them to file IRS Form W-8BEN with the escrow
company in order to exempt any interest income earned on the escrow funds from withholding.
c. To Be Effectively Connected or Not?
i. Rental Property in Hawaii. In almost all instances in owning Hawaii real
property it will be beneficial for a Canadian citizen who is a nonresident for U.S. income tax
purposes to hold their real property for rental purposes as “effectively connected.” In such
situation, rather than the flat 30% withholding tax on gross rents collected, the Canadian citizen will
elect to be taxed as a business in the United States. Once elected, even though he or she will now
be required to annually file IRS Form 1040NR (and State Form N-15), they will be able to net their
expenses related to the real property, including depreciation against the gross rents collected and
only pay U.S. income tax on the net income from the property, if any.3 One disadvantage of being a
foreign taxpayer is that while a U.S. married couple may file a single return (IRS Form 1040) for
their joint income, U.S. law requires each foreign national to file IRS Form 1040NR separately,
therefore requiring two returns if the property is owned in both names. This is done by preparing
and filing IRS Form W-8ECI with each of the parties with whom the Canadian nonresident is doing
business: their bank, their rental collection agent, etc. This form is not filed with the IRS.
ii. Non-Rental Property in Hawaii. For Canadian nonresidents who acquire
real property in Hawaii solely for personal use, it normally makes sense to consider treating the
situation as not effectively connected to a trade or business. In that instance, the Canadian would
file IRS Form W-8BEN with their bank and other agents. This form is not filed with the IRS.
It is strongly suggested that Canadian buyers get appropriate accounting/bookkeeping/tax
preparation. The statute of limitations does not ever begin to run if no returns are ever filed.
d. General Excise/TAT Licenses and Filing. More foreign owners get into trouble
with the State of Hawaii over failure to file (or in a number of cases, even obtain) general excise tax
returns. The State is looking for these and will catch a foreign owner, at the very latest, when they
attempt to sell or otherwise transfer their Hawaii real property. As with the income tax filings that
may be required of a Canadian owner of Hawaii real property, recommend that they get appropriate
accounting/bookkeeping/tax preparation help to minimize their liability from their failure to file.
Remember, like the income tax, the statute of limitations does not ever begin to run if no returns
are ever filed.
e. Mortgages. It is important to note that mortgages are structured differently in
Canada than in the U.S. While mortgages in Canada are oftentimes nonrecourse in nature, that is
the exception in Hawaii. This leads to the question as to whether a Canadian purchasing real estate
in Hawaii should consider financing in Canada against their Canadian real property or whether they

3
It is important that a Canadian owning real property in Hawaii not avoid filing the required IRS Form
1040NR and State Form N-15. The IRS has a rule that permits them to disallow any rental expenses 16
months after the normal filing deadline of June 15th when there is no return filed.

It is also important to note that if a taxpayer is going to be filing IRS Form 1040NR, they will need to obtain
a ITIN (International Taxpayer Identification Number) which is similar to an American social security
number. Canadian taxpayers should not use their Canadian Social Insurance Number. While ITINs were in
the past easy to apply for, now they are not issued by the IRS until a first income tax return is filed.
Canadian Investment in Hawaii Real Estate Page 7

should attempt to finance in Hawaii with a U.S. lender. Two points should be made here. First, if
a Canadian is going to finance against their Canadian property, they should consider asking their
Canadian lender to also take a mortgage against their Hawaii property, as this will present the
Canadian owner with the ability to deduct interest paid on the loan against any income earned if
they elect to be effectively connected with respect to that real property. Otherwise, the mortgage
interest will not be able to be deducted in determining such taxpayer’s net income for U.S. income
tax purposes. Second, note that the restrictions by U.S. banks on foreign borrowers have been
getting more and more strict. If a loan is necessary or advisable in the U.S., begin early and
understand that rates may be a little higher than that available to U.S. borrowers and the loan to
value of the property permitted by such U.S. lenders is generally lower when dealing with foreign
borrowers.
We hope this memorandum has been helpful. The information provided regarding this
complex issue is general in nature and not intended as specific advice. Please feel free to contact us
if you have any specific questions.

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•  Sunday ~ 11:00 am to 3:00 pm
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• Sunday ~ 1:00 pm to 5:00 p.m.
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Ocean Views & priced to sell!!!!!!!!!!!! Just a quick stroll to Keawakapu Beach and close to all Wailea amenities.   4 bedrooms 3 baths and a terrific family room perfect for a gym, media room or ?????  This is the best bang for the buck for south Maui homes!

 SOUTH MAUI’S BEST BUY CONDOS

South Maui Condominium

Best Buy List

As of March 4, 2010

Price                Condominium             Loc      Vac      Comments

$   134,900      Kihie Village 56-203 (New)     NK      N         2BR (short sale)Nice & Price

$   135,900      Waipuilani 206                         NK      N         1BR (REO) Loc Price!

$   180,000      Maui Gardens A207                 SK       N         1BR (short sale)Nice & Price

$   194,000      Kihei Garden Estate G103        NK      Y         1BR (REO) Loc & Price!

$   195,000      Keonekai Village 9102 (New)SK         N         2BR (short sale)Nice & Price

$   249,000      Kihei Kai Nani 103 (New)       SK       Y         1BR Nice & Price!

$   289,900      Kamaole Sands 4-203              SK       Y         1BR (REO) at Great Price!

$   322,900      Haleakala Shores B307(New)SK         Y         2BR (REO) Large & Price!

$   325,000      Maui Banyan H114                  SK       Y         1BR Location & Price!

$   345,000      Awihi Townhouse 4                  SK       N         2BR Price Gar Oceanviews!

$   395,000      Hale Kanani 3-106 (New)        SK       N         2BR Price & Nice!

$   429,000      Kam Beach Royale 605            SK       Y         1BR Nice Oceanviews!

$   489,000     Grand Champions 37                W        Y         2BR Large & Price!

$   499,000      Grand Champions 103 (New)   W        Y         1BR (short sale) On GC!

$   535,000      Wailea Fairway Villa P103       W        N         2BR On GC & Oceanviews!

$   579,000      Kihei Beach 503                       NK      Y         1BR Nice Oceanfront!

$   599,000      Palms at Wailea 202                 W        Y         1BR Nice & Price!

$   599,900      Maui Kamaole B210 (New)     SK       Y         2BR (short sale)Nice & Price

$   629,000      Nani Kai Hale 509                   NK      Y         1BR Spectacular Oceanfront!

$   639,000      Wailea Ekolu 1304 (New)        W        Y         1BR Great Oceanviews!

$   659,000      Ke Alii Oc Villa K101  SK       N         3BR Large & Great Price!

$   695,000      Wailea Ekolu 1405                   W        Y         2BR Price, Quiet Oceanviews

$   729,000      Royal Mauian 508                    SK       Y         1BR Beautiful Oceanfront!

$   759,000      Wailea Palms 3302                   W        N         1BR Price Loc & Views!

$   800,000      Hokulani Golf Villa 34 SK       N         2BR Res Condo!

$   849,000      Kai Malu 20B  (New)              W        N         3BR Res Condo Great Price!

$   895,000      Palms at Wailea 1201               W        Y         2BR Great Loc, Great Price!

$1,195,000      Royal Mauian 610                    SK       Y         2BR Beautiful Oceanfront!

$1,795,000      Hoolei T-1                               W        Y         3BR New, Large, Price!

$1,800,000      Maalaea Surf H5                      NK      Y         2BR Spectacular Oceanfront!

$2,345,000      Makena Surf B303                   Mak     Y         2BR Spectacular Oceanfront!

$2,395,000      Polo Beach 207                        W        Y         2BR Spectacular Oceanfront!

$3,900,000      Wailea Elua 1005                     W        Y         2BR Spectacular Oceanfront!

(New) = New Additions to List            Vac = Vacation Rentals allowed in project

The Hawaiian Islands Humpback Whale National Marine Sanctuary created in 1992 constitutes one of the world’s most important humpback habitats, and the only place in U.S. coastal waters where humpbacks reproduce. Numbers are increasing each year. More than 3,500 humpbacks visit Maui’s waters to breed and bear their young through March or April before returning to North Pacific waters—reason enough for a month-long cetacean celebration in honor of Maui’s returning humpback whales.

Maui Weekly