Washington Buyer and Seller Guide for Title and Escrow

Topics we will briefly overview which may be a part of, or a result of, your escrow include: • Capital Gains Tax • Change of Ownership Filing • Transfer Tax • FIRPTA • Property Taxes • Supplemental Taxes The I.R.S. provides free publications that explain the tax aspects of real estate transactions. A few of these include: Publication #523: Selling Your Home Publication #530: Tax Information for First Time Homeowners Publication #544: Sales and Other Dispositions of Assets Publication #551: Basis of Assets • Federal Requirements The Internal Revenue Service (IRS) requires that sellers report certain information pertaining to sales of real property. Under the Tax Reform Act of 1986, reportable transactions include sales and exchanges of properties including, but not limited to, houses, townhouses and condominiums. Also reportable is stock in cooperative housing corporations and mobile homes without wheels. Specifically excluded from reporting are foreclosures and abandonment of real property, as well as financing or refinancing of properties. The escrow officer, as the settlement agent, will ask the seller to complete a Certificate for Information Reporting for the 1099 S form which may be required by the IRS. The seller is required to provide their correct taxpayer identification number (social security number), as well as the closing date of the transaction and gross proceeds of the transaction. Most settlement agents now transmit the reportable information electronically to the IRS at the end of the year, although a “hard copy” of the form is included in the seller’s closing documents. There are many types of tax issues which should be considered during a real estate transaction. Ticor Title provides the following information as a resource only and always recommends that a seller and buyer consult with their legal and tax professionals for advice. 34 © Ticor Title Company TAXES