Ga. Comp. R. & Regs. R. 560-7-8-.35 - Withholding on Sales or Transfers of Real Property and Associated Tangible Property by Nonresidents of Georgia
(1)
Nonresidents of Georgia. The
term "Nonresident of Georgia" shall include individuals, trusts, partnerships,
corporations, and unincorporated organizations. For purposes of O.C.G.A.
Section 48-7-128, the following persons
are Nonresidents of Georgia and are therefore subject to the withholding tax
requirements:
(a)
Individual -
Any individual having his or her principal residence outside Georgia at the
time of closing, unless he or she otherwise meets the requirements of O.C.G.A.
Section 48-7-128(a) and
subparagraph (4)(d) of this Revenue Rule to be deemed a resident .
(b)
Corporation - Any
corporation whose principal place of business is located outside Georgia,
unless it otherwise meets the requirements of O.C.G.A. Section
48-7-128(a) and
subparagraph (4)(d) of this Revenue Rule to be deemed a resident .
(c)
Partnership - Any
partnership whose principal place of business is located outside Georgia,
unless it otherwise meets the requirements of O.C.G.A. Section
48-7-128(a) and
subparagraph (4)(d) of this Revenue Rule to be deemed a resident .
(d)
Trust - Any trust that is
being administered by a nonresident fiduciary if the gain from the sale will be
taxed to the trust or that has nonresident beneficiaries if the gain from the
sale will be taxed to the beneficiaries, unless it otherwise meets the
requirements of O.C.G.A. Section
48-7-128(a) and
subparagraph (4)(d) of this Revenue Rule to be deemed a resident .
(e)
Limited Liability Company -
Any limited liability company whose principal place of business is located
outside Georgia, unless it otherwise meets the requirements of O.C.G.A. Section
48-7-128(a) and
subparagraph (4)(d) of the Revenue Rule to be deemed a resident .
(f)
Limited Liability Partnership
- Any limited liability partnership whose principal place of business is
located outside Georgia, unless it otherwise meets the requirements of O.C.G.A.
Section 48-7-128(a) and
subparagraph (4)(d) of this Revenue Rule to be deemed a resident .
(2)
Co-owners. If two
or more persons sell real property which they own as joint tenants with right
of survivorship or as tenants in common, their respective status as to
residence will be determined separately. Withholding is required only on the
amount realized or gain recognized by the nonresident co-owner(s).
(3)
Calculation of tax.
(a)
Withholding requirement and tax
rate. Nonresidents who sell or transfer Georgia real property are
subject to a 3% withholding tax . The withholding tax is to be computed by
applying the 3% rate to the purchase price. As an alternative, if the seller
provides the buyer with a completed affidavit of gain (Form IT-AFF2 or
equivalent) swearing to the amount of the gain, the withholding may be computed
by applying the 3% rate to the amount of recognized gain.
(b)
Threshold. Withholding will
not be required on transactions where the purchase price is less than $20,000.
If the purchase price exceeds $20,000 and the tax liability is less than $600,
the seller may provide the buyer with a completed affidavit of gain (Form
ITAFF2 or equivalent), swearing to the amount of the gain, and the buyer will
not be required to withhold.
(c)
Installment transactions. Every buyer or transferee of real
property which is sold on the installment basis and who is required to deduct
and withhold the withholding tax imposed by subsection (b) of O.C.G.A. Section
48-7-128 shall file the required
return and remit payment of the tax to the Department in the following manner.
1.
Initial return and initial payment.
The initial required return and the initial tax payment shall be
remitted on or before the last day of the calendar month following the calendar
month within which the sale or transfer giving rise to the withholding tax
occurred. The initial payment is calculated by taking 3 percent of the purchase
price less the installment note. Or if the seller elects to base the
withholding on the gain, 3 percent of the gain that would be recognized as a
result of the proceeds received at the time of the closing.
2.
Subsequent return and subsequent
payments. For each subsequent return and subsequent payment, the amount
of with- holding is calculated by taking 3 percent of the principal amount
included in each payment. Or if the seller elects to base the withholding on
the gain, 3 percent of the amount of each principal payment which represents
the gain. The buyer shall file the required return and remit the payment to the
Department on or before the last day of the calendar month following the
calendar month within which the cumulative amount withheld for the year, less
any payments already made to the Department for the year, exceeds $300. If the
cumulative amount withheld for the year, less any payments already made to the
Department for the year, does not exceed $300 for the calendar year, the buyer
shall file the required return and remit the payment to the Department on or
before the last day of the month following the end of the calendar year within
which the tax was withheld.
3.
Threshold. The threshold as described in subparagraph (3)(b) is
completed based on the total purchase price or total gain as if the property
were not sold on the installment basis, not on each separate principal payment
or the amount of the principal payment which represents gain.
(4)
Forms.
(a)
Return. Unless
otherwise exempted, every buyer or transferee of real property and associated
tangible property from a nonresident seller or transferor must file a return
and remit payment to the Department . Form G-2RP may be used as a return and
remittance form; however, if the buyer has or creates a form that provides the
sales date, buyer's and seller's names, addresses, identification numbers,
total amount of the sales price or the gain recognized and the amount of
withholding to be remitted, such form may be used instead. The buyer or
transferee is required to provide the seller with a copy of the G-2RP or other
form for the seller to file with the seller's income tax return.
(b)
Other document as substitute for
return. The buyer, in substitution for the G-2RP, may use the closing
statement, transfer tax statement or other document showing all the information
in (4)(a) above. The information should be contained in one page, and that page
should be clearly designated at the top "Georgia Withholding Tax Return for
Real Estate Transfer". The designation may be handwritten or typed, so long as
it is clear and legible.
(c)
Statement of withholding. If the transaction is subject to
withholding, the buyer shall provide to the seller a copy of the Form G-2RP (or
the document used in lieu of that form) as a statement of tax withheld. A copy
of the statement shall be filed with the seller's Georgia Income Tax Return in
order that the seller may receive credit for the tax withheld on the
transaction.
(d)
Affidavit of
sellers' residence. O.C.G.A. Section
48-7-128(a)
provides conditions under which a seller may be deemed a resident of Georgia
for purposes of the withholding requirements. In order to be deemed a resident ,
the seller must provide the buyer with an affidavit swearing that the
conditions in the statute and this rule are met. Form IT-AFF1 has been prepared
by the Commissioner as an example of the information which must be provided in
the seller's affidavit in order to document that the seller is a resident or a
deemed resident and that, therefore, the buyer is not required to withhold.
Please note that IT-AFF1 is only required by law where a seller is a
nonresident but meets the conditions under which the seller may be deemed a
resident ; however, it may also be used by the buyer to document the seller's
representation of Georgia residence if the parties so desire. Copies of Form
IT-AFF1 may be obtained from any Department of Revenue office.
(e)
Affidavit of seller's gain.
O.C.G.A. Section
48-7-128(c)
allows a seller to provide a buyer with an affidavit swearing to the gain
required to be recognized on a transaction so that withholding may be based on
the gain rather than the purchase price. Form IT-AFF2 has been prepared by the
Commissioner as an example of an affidavit swearing to the gain on a
transaction. The seller may use this affidavit or may execute an alternate
affidavit that contains substantially the same information. This affidavit
should be sent to the Department of Revenue at the same time as the Form G-2RP
if the balance is due. Documentation of the cost basis, depreciation, and
selling expenses should be retained by the seller and only be provided to the
Department when requested. Copies of Form IT-AFF2 may be obtained at any
Department of Revenue office.
(5)
Exemptions. Although there
are no filing requirements under law in exempt transactions, the Commissioner
has prepared a Certificate of Exemption (Form IT-AFF3) as an example of a form
which may be executed and provided to the parties for record keeping purposes.
This form, or a similar document executed by the seller and provided to the
buyer, may be used to document the buyer's reliance on the seller's
representation that the sale transaction is exempt. Copies of the Certificate
of Exemption form may be obtained from any Department of Revenue
office.
Notes
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