For sales of real property located in West Virginia withholding is calculated using either 2.5% of the total payment or 6.5% of the estimated capital gain from the sale. Total payment is defined as the total sales minus:

• Debts of the transferor secured by mortgage or other lien on the property being transferred that are being paid upon the sale or exchange of the property, and
• Other expenses of the transferor arising out of the sale or exchange of the property and disclosed on a settlement statement prepared in connection with the sale or exchange of the property, not including adjustment in favor of the transferor.

Unlike most other states, the buyer is not the one responsible for withholding and reporting the sale. Instead, the real estate reporting person is. The state prioritizes the person or entity who is responsible for withholding in the order listed below and defines the real estate reporting person as the:

1. Person responsible for closing the transaction which includes attorneys or settlement agents, or
2. Buyer's lender, or
3. Seller's real estate broker, or
4. Buyer's real estate broker, or
5. Person responsible for reporting a sale on IRS Form 1099-S as stated in the Treasury Regulations.

The buyer is only responsible for withholding when there is not an attorney, mortgage lender or real estate broker involved in the sale. The withholding must be remitted to the tax commissioner within 30 days of closing.

There are six (6) exceptions from withholding:

1. The seller is a resident of West Virginia.
2. The tax commissioner has issued a certificate stating:
1. No tax is due from the sale; or
2. A reduced amount is due at closing; or
3. The transferor has provided to the tax commissioner adequate security to cover the amount required to be withheld
3. If the property is being foreclosed upon or transferred via deed in lieu of foreclosure with no additional consideration.
4. The seller is a governmental agency.
5. The property being sold is the principal residence of the seller.
6. The transfer is without consideration such as a gift or transfer for tax or estate planning purposes.

West Virginia reporting forms are available by visiting https://tax.wv.gov/Pages/default.aspx or by calling a Taxpayer Service Representative at 1.800.982.8297.

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