2% Sales Tax on House & Lot sale in Colorado by non-resident.

[mikeburg]

My tax client here in Texas was told they have to pay a 2% Colorado Sales Tax on the sale of the house in Colorado since they are not residents of Colorado.

Does anyone know if there is a way to get that 2% Colorado tax waived?

I am not familiar with a 2% Colorado sales tax.

Anyone got any ideas?

Thanks for any help you can provide. mikeburg

[kathyc2]

My tax client here in Texas was told they have to pay a 2% Colorado Sales Tax on the sale of the house in Colorado since they are not residents of Colorado.

Does anyone know if there is a way to get that 2% Colorado tax waived?

I am not familiar with a 2% Colorado sales tax.

Anyone got any ideas?

Thanks for any help you can provide. mikeburg

It appears it's not a sales tax but an estimated income tax that will be trued up when they file a CO return for the tax due on the sale. https://www.colorado.gov/pacific/sit...es/Income5.pdf

[S T]

If it is like California - it is a % of sale or adjusted sale for a Colorado Withholding Tax - When the Colorado NR return is filed you claim the credit for withholding and then all or a portion thereof is refunded.

There is a 2% withholding tax on the sales price of Colorado real estate on the amount in excess of $100,000 to sellers not residing in Colorado. The tax is withheld at the time of closing by the title insurance company. It is treated as an estimated payment to Colorado. The seller can claim credit for the estimated payment against the income tax liability when filing a Colorado income tax return for the year of the sale.

Of course there is a handy little form to report this information to the State of Colorado. Form DR1083 is not required if:
• The selling price is less than $100,000
• The seller has a Colorado address
• The seller is a government agency
• The buyer of the property is a bank and the property was acquired by foreclosure

Sandy

[Burke]

Most states are now doing this at closing for non-resident sales. They found they never got the money otherwise. I had one in SC a while back, but was able to get it waived by preparing a Sche D showing there was no gain to report and sending it to them. Note that Form DR 1083 can be completed to be exempt from withholding in CO if they can qualify.

[Roland Slugg]

California has had a withholding requirement for at least ten years. Its rate is 3.33%, and it even applies when the seller is a California resident.

Please note that the state tax withholding is not a selling cost and does NOT reduce the gain (or increase the loss) on the sale. Rather, it is taken as a credit on the seller's state tax return for the year ot the sale. It can also be deducted on Schedule A of the seller's federal income tax return ... if he itemizes. It's handled just like state withholding on a W-2 because, well, it is state withholding.