Form Or-18 - Report Of Tax Payments On Real Property Conveyances Page 3
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6Calculating the tax payment
the portion of the conveyance attributable to the nonexempt
transferor(s).
Consideration
If two transferors are married/RDPs and intend to file a
The consideration for the conveyance is the amount given to
joint Oregon tax return for the year of the transaction, com-
the transferor in exchange for the transferor’s interest in the
plete one Form WC. Otherwise, complete a Form WC for
real property and is generally the sales price. Consideration
each transferor.
includes cash, assumed debt, and the fair market value of
any property given to the transferor.
Form WC, part A: Exemption
Net proceeds
General information
This is the amount from the conveyance that is to be dis-
bursed to the transferor. Generally, this is the amount of
If a nonexempt transferor reasonably determines the gain
“cash to seller” shown on the HUD-1 settlement sheet.
from the sale is unlikely to be subject to Oregon tax, the
nonexempt transferor may claim exemption. In making the
Example 2: Katie sold a small commercial building for
determination, the transferor may not consider other losses
$500,000. She purchased it for $250,000 10 years ago and still
or deductions that may be claimed when the tax return is
owed $205,000 on it. Her selling expenses from the prop-
filed. To claim this exemption, the nonexempt transferor
erty were $20,000 and included typical costs. The amount
must complete part A of Form WC, explaining why tax
on the HUD-1 settlement sheet on the “cash-to-seller” line
is unlikely to be due and a calculation that explains the
was $275,000. The escrow agent is scheduled to disburse
estimate. If more space is needed, a separate page may be
$275,000 from this conveyance. The “net proceeds” related
attached.
to this transaction used to calculate the tax payment is
For example, a California resident who sells Oregon prop-
$275,000.
erty may reasonably expect to be eligible to claim the credit
Example 3: Same facts as Example 4, except that Katie
for taxes paid to another state on the Oregon nonresident
entered into a deferred like-kind exchange. The escrow
return based on the amount of gain that California will also
agent forwarded $200,000 of the amount due to the trans-
tax. In that case, the nonexempt transferor completes the
feror to a qualified intermediary. The escrow agent is
top part of Form WC and part A, explaining the situation
scheduled to disburse $75,000 to Katie. The “net proceeds”
and providing a simple calculation of how the credit will
used to calculate the tax payment is $75,000.
offset any Oregon tax due on gain from the sale of the real
property.
Gain includable in Oregon taxable income
This is the amount of consideration received for the con-
Form WC, part B: Calculation of gain and
veyance, less the transferor’s federal adjusted basis in the
property or the Oregon adjusted basis, if different than the
tax payment
federal adjusted basis. The result is reduced by the selling
costs directly related to the conveyance (if not already taken
General information
into account in the basis calculation) and any part of the
If a transferor is not exempt from the tax payment require-
gain that is excludable under federal law.
ments or does not complete part A of Form WC indicating
To determine gain includable in Oregon taxable income,
an exemption, the authorized agent must withhold from
you must determine your adjusted basis in the property
the proceeds and submit the smaller of:
being sold. “Adjusted basis” is generally considered the
• Four percent of the consideration (sale price);
amount originally paid for the property plus improvement
• Eight percent of the gain that is includable in Oregon tax-
costs and minus depreciation. Transferors may wish to
able income; or
consult a tax professional for assistance if they are unsure
• The net proceeds disbursed to the transferor.
how to calculate their adjusted basis. If the adjusted basis is
unknown at the time of the transfer, the authorized agent
To determine the proper tax payment, the transferor must
must submit a tax payment of the lower of 4 percent of the
complete part B of Form WC, “Calculation of gain and tax
consideration paid or the net proceeds from the sale.
payment,” and provide it to the authorized agent handling
the transaction in the time specified by the authorized
Example 4: Matt sold his rental triplex for $750,000. He pur-
agent. If the transferor does not provide the completed
chased the property 15 years ago for $400,000. He imme-
Form WC to the authorized agent as required, the autho-
diately renovated the property spending an additional
rized agent must remit 4 percent of the consideration for the
$200,000. He has claimed straight-line depreciation on the
conveyance, or, if less, the entire net proceeds.
property over the last 15 years totaling $327,270 ($21,818 each
year for 15 years). His Oregon and federal adjusted basis in
Due date for Form WC
the rental is $272,730 ($600,000 – $327,270). He had ordinary
The transferor must provide the completed Form WC to the
selling costs of $50,000. His gain includable in Oregon tax-
authorized agent on or before the date of the closing.
able income is $427,270 ($750,000 – $272,730 – $50,000).
150-101-183 (Rev. 12-12)
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