Oregon is going to see a few changes to the way Real Estate sales, contracts and proceeds are handled as we begin 2008. Out of state sellers will have a new rule that they and their agents will need to be very well educated on.
I have just started my own research to best protect my sellers and educate them so they are prepared for the new changes.
The Oregon Legislature approved a new bill - HB 2592 - this is a huge change. Upon the sale or lease of a property - there will or can be a 4% of the sales price or 10% of the gain deduction from the seller's proceeds. This deduction will be to pay Oregon Income Tax. It will be held in a trust account and sent to the State of Oregon Revenue Department.
My Questions have been;
Are there exceptions to this rule - and the answer is yes -
- If the sales price is under $100,000
- If the buyer obtains the property through foreclosure
- If the seller is a resident of the State of Oregon
- If the seller is a corporation, with a permanent place of business in Oregon
- If you will not owe tax under ORS chapter 316, 317or 38 for the tax year because the conveyance is non-taxable with an exchange.
Obviously these changes can cause a lot of confusion if you are not prepared - knowing what to expect takes the frustration out of the sale of your home.
As always your comments and questions are appreciated.
Thesa Chambers • Broker • RE/MAX Sunset Realty
541-771-7064 Cell • 541-536-0117 Office • 888-868-2050 Toll Free
Mailing Address • PO Box 3510, La Pine, OR 97739
Thesa... 4% ? ouch... now, question. How many of your sellers are out of state sellers? Could this be construed as discrimination? If the state knows the percentage of in state to out of state sellers? hhhhmmmm
Linda - it is amazing what changes from year to year
Mana - no sales tax in Oregon means generally a higher income tax - can't have it all
Hi Thesa,
Looks like it's been contagious. We've had 3 1/3% of the sales price for quite a few years now, our last govenor, not the Terminator. Last year it was revised somewhat effective 1/07, the seller could choose the original method, 3 1/3 of s/p or a max rate of 9.3 based on the seller's estimated gain.
And yes, there are some exemptions, yet many do have it withheld.
Thesa,
Oh, I just noticed you included "leases" yikes!
Lynda - thank you for letting all of us know we are not the only ones - I am not sure how the lease part works that is taken from the bill - but - not sure how they are working that since it is withheld by escrow & title -
Marchel - the nice thing is I do not have to do the calculations - it is al up to escrow and title -
Thesa - Good info. It's amazing what happens when a party gets complete control of the govt.
While there are good reasons to say that this income should be taxed, which it would be if they were Oregon residents, it will be interesting to see what happens as less out of state buyers invest here.
Of course, one of the reasons that property values have increased so much is due to CA investors out bidding locals for properties and then holding them for a short time and flipping them. This appears to be a Govt. imposed penalty.
An unfortunate aspect is that many out of state sellers will now ask you to sell for that much more. They will also take their 1031 exchange out of state.
I am an out of state owner and trying to sell a condo. since the market crash, i will
not take a profit, but a loss instead. does that mean i still pay the 4% if i take a loss??