The rate of Georgia real estate withholding is 3% of the sales price or the seller's gain. In order to apply the withholding to the gain, the seller must complete the appropriate Georgia Department of Revenue (DOR) form attesting to the amount of the taxable gain. The seller is responsible for the calculation of the gain. Any balance due, along with the appropriate DOR form, must be remitted to the state at closing.

This DOR form, along with an explanation of the cost basis and expenses, must be kept with the closing file. The buyer and closing attorney may rely on the seller's affidavit. If the calculated amount for the withholding is more than the cash received at closing, the buyer must withhold and remit only the net proceeds. 

There are exemptions to the withholding requirement, including, but not limited to: 

• If the property qualifies as a principal residence under the Internal Revenue Code, the exemption from withholding applies for the gain that is excluded (as described in the Internal Revenue Code).
• Withholding is not required on transactions where the purchase price is less than $20,000.
• If the purchase price exceeds $20,000, but the gain or tax liability is less than $600, and the seller signs an affidavit certifying the gain, the buyer is not required to withhold.
• If the seller is a mortgagor conveying the mortgaged property to a mortgagee or a private mortgage insurance company in a foreclosure or in a transfer in lieu of foreclosure with no additional consideration.
• Transactions are also exempt where the seller or buyer is the Federal National Mortgage Association (FNMA), the Government National Mortgage Association (GNMA), or the Federal Home Loan Mortgage Corporation (FHLMC).
• Federal and state agencies of the United States or the state of Georgia, tax exempt organizations and insurance companies which pay tax on its premium income to Georgia are not required to withhold. 
• When the transaction is a like-kind exchange and the income from the sale is not subject to federal or state income tax, the buyer is not obligated to collect withholding from the seller.

Every buyer of real property located in Georgia who is required to deduct and withhold the withholding, shall file the required DOR return and remit payment on or before the last day of the calendar month following the calendar month in which the sale occurred.

For questions and additional information, contact the Georgia Department of Revenue at:

https://dor.georgia.gov

The information provided herein does not, and is not intended to, constitute legal advice; instead, all information, and content, in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. This article contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; Fidelity National Title Group does not recommend or endorse the contents of the third-party sites.

Article provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
Fidelity National Title Group
National Escrow Administration