Any insight on the HARPTA tax law

[John Harrington]

My Ex-Wife and I are finally selling our apartment which we bought when I was stationed in Hawaii.  She has been living in that apartment for over 8 years now, but since then I have moved back home to MD.  I have recently been told that because I am an out of state seller we will be hit with a 5% of the sales total HARPTA tax (which isn't actually a tax but a law).  

I had thought since she had lived there over 2 years of the past 5 years we would not be hit with the Capital Gains tax. 

I'm having her talk to a CPA/Tax professional in Hawaii Monday to see what our options are.

Thanks ahead for any insight.