Closing Tip – GA Non Resident Seller Tax Withholding
Did you know that in most instances if a non-Georgia resident seller has more than a $20,000.00 gain on the sale of his/her real property in Georgia, that the closing attorney (on behalf of the buyer) is required to withhold three percent (3%) of the realized gain (that amount is subtracted from the seller’s proceeds). That withheld amount is then sent in by the closing attorney to the Georgia Department of Revenue (in some instances the seller can get the amount withheld back from the GA DOR).
You calculate the realized gain by taking the cost the seller bought the property for (plus) any depreciation (minus) closing costs and the amount they are selling it for. While there are some exceptions to this general rule, they are few and far between. So if you know your out of state seller client is selling the property for a good deal more than they bought it for (in other words his/her gain will be more than $20,000.00), you should mention this to them early on so he/she is not surprised when the closing attorney tells them they are required to withhold some of the sales proceeds at closing. As always, if you have any questions or need anything at all relating to real estate closings, trust and estates, probate and corporate matters please contact me at (912) 484-1996 or jgerber@brannenlaw.com