Fillable Form Or-18 - Withholding On Real Property Conveyances (Page 3 of 6) in pdf

the authorized agent handling the transaction in the time

Transferor is married or is a registered domestic partner

specified by the authorized agent. If the transferor does not

If both transferors are exempt and the couple intends to file a

provide the completed Form WC to the authorized agent as

joint Oregon tax return for the year of the transaction, com-

required, the authorized agent must withhold and remit 4

plete one Form WC explaining why the transferors qualify

percent of the consideration for the conveyance, or, if less,

for exemption. If only one of the transferors is exempt, com-

the entire net proceeds.

plete a Form WC for that person. Complete a separate Form

WC for the transferor who is subject to withholding. See the

Due date for Form WC

instructions for Form WC for more information.

The transferor must provide the completed Form WC to the

Transferor jointly owns property and is not married nor a

authorized agent on or before the date of the closing.

registered domestic partner

Complete a separate Form WC for each transferor who

Calculating withholding

qualifies for exemption. Complete one Form WC for each

transferor who is subject to withholding. See the instruc-

Consideration

tions for Form WC.

The consideration for the conveyance is the amount given to

the transferor in exchange for the transferor’s interest in the

real property and is generally the sales price. Consideration

Form WC, part A: Exemption from

includes cash, assumed debt, and the fair market value of

withholding

any property given to the transferor.

General information

Net proceeds

If a nonexempt transferor reasonably determines the gain

This is the amount from the conveyance that is to be dis-

from the sale is unlikely to be subject to Oregon tax, the

bursed to the transferor. Generally, this is the amount of

nonexempt transferor may claim exemption. In making the

“cash to seller” shown on the HUD-1 settlement sheet.

determination, the transferor may not consider other losses

Example 2: Katie sold a small commercial building for

or deductions that may be claimed when the tax return is

$500,000. She purchased it for $250,000 10 years ago and still

filed. To claim this exemption, the nonexempt transferor

owed $205,000 on it. Her selling expenses from the prop-

must complete part A of Form WC, explaining why tax

erty were $20,000 and included typical costs. The amount

is unlikely to be due and a calculation that explains the

on the HUD-1 settlement sheet on the “cash-to-seller” line

estimate. If more space is needed, a separate page may be

was $275,000. The escrow agent is scheduled to disburse

attached.

$275,000 from this conveyance. The “net proceeds” related

For example, a California resident who sells Oregon prop-

to this transaction used to calculate withholding is $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 withholding 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

withholding amount

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 withholding require-

gain that is excludable under federal law.

ments or does not complete part A of Form WC indicat-

ing an exemption, the authorized agent must withhold the

To determine gain includable in Oregon taxable income,

smaller of:

you must determine your adjusted basis in the property

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

To determine the proper amount of withholding, the

unknown at the time of the transfer, the authorized agent

transferor must complete part B of Form WC, “Calcula-

must withhold either the lower of 4 percent of the consider-

tion of gain and withholding amount,” and provide it to

ation paid or the net proceeds from the sale.

150-101-183 (Rev. 10-11)

Form Or-18 - Withholding On Real Property Conveyances Page 3

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