Per the Oregon Department of Revenue, "the authorized agent is required to withhold the least of three amounts:
- 4 percent of the consideration (sales price);
- 8 percent of the gain from the sale that is includible in Oregon taxable income for the year; or
- The net proceeds distributed to the transferor (seller).
For example, lets assume a taxpayer is a nonresident of Oregon and sold a piece of Oregon property for $300,000. Of this amount, that taxpayer will receive $200,000 and the rest will go to a bank loan, taxes, and fees. Also, let us assume the taxpayer has an adjusted basis of $120,000 in the property.
The authorized agent will withhold the least of one of following;
1. 4 percent of the consideration ($300,000 x 4% = $12,000);
2. 8 percent of the gain includible in Oregon taxable income ($180,000 x 8% = $14,400); or
3. the net proceeds distributed to the transferor ($200,000).
Thus, in the example above, the taxpayer will have $14,000 withheld from the proceeds of the sale of Real Estate and this amount will be sent to the Department of Revenue as a prepayment of her Oregon tax.
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