Fillable Form R-5 - Nonresident Real Property Owner Registration (Page 2 of 2) in pdf

Nonresident Real Property Owner Registration Instructions

General

Fee for preparation of Form R-5: Section 6.1-2.23:2 of the Code of Virginia prohibits settlement agents from charging any

party to a real estate transaction, as a separate item on a settlement statement, a sum exceeding $10 for complying with

any requirement imposed on the settlement agent by §§ 58.1-316 or 58.1-317.

Rentals

Brokers (as defined in IRS Code Sec. 6045) managing Virginia rental properties must request registration from all existing

clients.

Future clients must be requested to register when they engage the broker to manage rental property.

Brokers must file on behalf of nonresidential property owners (payees) who do not furnish the requested forms within 60

days. Brokers are only responsible for the information available in their records.

Nonresident owners previously registered may furnish subsequent brokers with a copy of current registration form in lieu

of completing a new form. These copies do not need to be filed with the Department by the broker.

Nonresident owners of rental properties not managed by a broker also must comply with the registration requirement.

Sales

Real estate reporting persons (as defined in IRS Code Sec. 6045) must request registration forms from all nonresident

sellers upon closings.

If a client does not complete the form at closings, the real estate reporting person must complete a form on the client’s

behalf. Real Estate reporting persons are only responsible for information that is available in their files.

Sales exempt from federal and state income tax are also exempt from registration; an exemption certificate must be com-

pleted and given to the real estate reporting person.

Filing Information

Brokers and real estate reporting persons are required to transmit the registration forms by the 15th of the month following

the month in which the closing occurred (sales) or the form was received from the nonresident property owner (rentals).

The penalty to the broker or real estate reporting person for failure to file is $50 per month up to a maximum of six

months.

Nonresident payees are: Individuals who are not domiciled in Virginia or who do not live in Virginia for more

than 183 days during a year; Corporations not organized under Virginia law; Estates

and Trusts (1) which consists of real property belonging to a nonresident individual

(or Decedent), or (2) that are being administered outside of Virginia; and Partnerships,

Limited Liability Corporations, and S-Corporations which have nonresident partners

or shareholders who receive income from the sale of rental or real property located in

Virginia.

Completing the Form

Items not specifically mentioned below are self-explanatory on the form. Each section, Parts I-IV, is to be filled out

completely.

If the nonresident payee does not use the services of a broker or real estate reporting person, Part V should not be com-

pleted. The nonresident payee should mail the Form R-5 or R-5E to the Department of Taxation. If, however, nonresident

payee uses a broker or real estate reporting person, Part V should be completed and the nonresident payee should mail

Form R-5 or R-5E to the address given at the bottom of the Form.

Gross Proceeds and Closing Date - The amount of gross proceeds and the closing date are the same as the information

reported on Federal Form 1099-S, if applicable.

Installment Sale - Generally - If at least one payment is to be received after the close of the taxable year in which the sale

occurs (see IRS Code Sec. 453 (b)), list the dates payments will be made.

Form R-5 - Nonresident Real Property Owner Registration Page 2