State Tax Withholding For Nonresident Sellers of Oregon Real Property

Posted on by Phil Querin

See: ORS 314.258 and Oregon Administrative Rule 150-314-258.

Escrow companies are required to withhold a portion of a non-resident seller’s net proceeds from the sale of Oregon real property for transmittal to the Oregon Department of Revenue.

As a result, at the time of closing, all sellers of Oregon property are asked to provide escrow with one of the following: (a) proof of residency in Oregon; (b) a completed Department of Revenue Form in which the seller certifies that they are exempt from Oregon’s withholding law; or (c) other written assurance of Oregon residency.

If a seller is unable to establish that they live in Oregon full time, or they are not otherwise exempted, escrow is required to withhold the tax due. It is calculated based upon the least of the following three amounts: (a) 4 % of the sales price; (b) 8 % of the gain from the sale; or (c) the net proceeds distributed to the seller.

Escrow is not required to withhold for: (a) Sellers who are Oregon residents, or C corporations doing business in Oregon after the property sale; or (b) Pass-through entities such as certain partnerships, S-corporations, limited liability companies with more than one owner, limited liability partnerships, or certain trusts and estates. The statute contains several exemptions. ~Phil

Posted in Miscellany, Real Estate Laws, Realtor Risk Management, Realtors, Tax Issues
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