Cali flippers, the jig is up
Governor Ted signed a bill last week that will require tax withholding on the proceeds of all Oregon real estate sales where the seller is a nonresident of our fair state. It's to make sure that these out-of-staters pay the Oregon income tax (usually 9 percent) on any taxable gain that they realize on the sale. It looks as though the escrow agent must pull out of the proceeds, and forward to Salem in the seller's name, the lowest of three amounts: 4 percent of the value of the property; 4 percent of the net proceeds; or 10 percent of the gain included in taxable income. I don't know how a typical escrow agent could know the seller's taxable income, and so it looks as though the withholding in almost every case will be 4 percent of the price.
How will the escrow know whether the seller is an Oregon resident or not? If the seller swears that he or she is a resident, the agent can take that word as gospel and not withhold. Sounds a little loosey-goosey to me. And speaking of loopholes, the whole shebang doesn't take effect until January 1.
| Posted at 9:38 AM | Permalink |
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Comments (6)
The leg. should take it a step further and pass a law that doesn't allow out-of-staters (read: Californians) to buy property until they've lived in the state for two years.
Posted by Casey | August 7, 2007 12:22 PM
I suspect that someone will challenge the new law on constitutional grounds -- that it impermissibly discriminates against out-of-state residents. But I would think that it would be upheld.
Posted by Jack Bog | August 7, 2007 1:09 PM
What happens when the Seller is sending the money to an accomodator for a 1031 exchange?
Posted by John | August 7, 2007 3:49 PM
wait what? out of staters not owning property?! and that it would be upheld?!
not only would that be a bizarre law that would never see the light of day in any legislature, it would get knocked down in an instant.
now, if you changed "out of state" people with "chinamen", and went back 100 years. OK. i could see that happen.
Posted by george | August 7, 2007 4:35 PM
GONG!
I didn't say that the commenter's proposed ban on out-of-staters owning property would be upheld. I said that I thought "the new law" would be upheld. Meaning the real one.
As for 1031 deals, there's a definition of "agent" in the new law that may hold the answer.
Posted by Jack Bog | August 7, 2007 9:22 PM
"10 percent of the gain included in taxable income"
I thought Oregon's tax was 9%. Oh well, one more reason to put less demand on Oregon property. Remember those gains from 2001-2006, say goodbye forever.
Glad to hear open-minded people like Casey still exist. I assume he was born here like Homer and Gerding-Edlen? Look at what the natives have done to our city before you blame the Calis.
Posted by Steve | August 7, 2007 10:00 PM