Portland Metro/Tigard Real Estate News

In this forum we will offer discussions on a wide variety of subjects, but focus on Portland Metro and real estate. Hopefully our insights and experiences will inform, educate, challenge and entertain our readers week after week.

Wednesday, January 23, 2008

New Escrow Withholding Policy

Taking effect at the beginning of this year, escrow is now responsible for making sure you are paying your income taxes. What this means to you is that if you sell a house, depending on how you fill out the proper forms, escrow can hold up to 4% of your proceeds.

There are three forms that apply to this, the first being a preliminary form to determine exempt status. This statement can mean the seller is to get all the profits, or fill out more forms.

If the seller does not meet exempt status then they move on to form WE-40. This form includes some other possible exemptions like a sales price of under $100,000, an individual resident of Oregon, or sale of a residence with under $250,000 in taxable gain per owner.

Still not exempt? Last is form 40-CW which determines how much escrow needs to hold onto. Failure to complete the forms will mean automatic withholding of either 4% of the sales price or all the net proceeds, whichever is less. Escrow is not allowed to advise when filling out these forms so it is suggested to see your tax professional.

Apparently there has been an issue with people selling their houses and moving out of state and then never filing their Oregon state taxes. All of this, of course, is a pain but all in an effort to make sure Oregon gets the money it needs for our basic services.



No comments: