Compilation of Rules and Regulations of the State of Georgia
Department 560 - RULES OF DEPARTMENT OF REVENUE
Chapter 560-7 - INCOME TAX DIVISION
Subject 560-7-8 - RETURNS AND COLLECTIONS
Rule 560-7-8-.35 - Withholding on Sales or Transfers of Real Property and Associated Tangible Property by Nonresidents of Georgia

Universal Citation: GA Rules and Regs r 560-7-8-.35

Current through Rules and Regulations filed through September 23, 2024

(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.

O.C.G.A. Secs. 48-2-12, 48-7-128.

Disclaimer: These regulations may not be the most recent version. Georgia may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.

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