Who Must File Form G2-RP When Selling Property in Georgia?

Selling property in Georgia may come with tax obligations that some sellers are unaware of. One key requirement is filing Form G2-RP, which ensures state income tax withholding on real estate transactions is collected at the time of sale rather than later when filing a return.

Understanding who must file and how it applies can help prevent unexpected liabilities or delays in closing.

Who Must File G2-RP

Sellers of Georgia real estate must file Form G2-RP when the sale is subject to state income tax withholding. The Georgia Department of Revenue requires this form to ensure tax obligations are met at the time of the transaction.

Nonresident individuals who own property in Georgia must determine whether withholding applies. Entities such as corporations, partnerships, and trusts that lack a permanent business presence in the state are also subject to this requirement. Even businesses operating in multiple states must comply if they do not have a fixed location in Georgia.

Georgia residents may need to file if they are selling property on behalf of a nonresident entity or if multiple owners with different residency statuses are involved. Filing responsibility depends on how the property is titled and whether the seller is acting as an intermediary.

Nonresident Withholding Requirements

Georgia requires withholding on real estate sales by nonresidents to ensure state income taxes are collected at the time of transfer. The buyer or closing agent must withhold and remit the tax to the state.

The withholding amount is the lower of 3% of the purchase price or 3% of the seller’s net gain, as required by Georgia law (O.C.G.A. 48-7-128). The buyer or closing attorney submits this amount using Form G2-RP. Failure to comply can result in penalties and interest charges.

Certain transactions are exempt. Sales below a specific price threshold or those where the seller provides proof of Georgia residency may qualify. Sellers anticipating a lower tax liability than the standard withholding rate can apply for a reduced withholding certificate before closing by submitting estimated gain calculations and supporting documents.

Calculating Withholding Amounts

The withholding amount is based on the seller’s taxable gain. The adjusted basis of the property—calculated as the original purchase price plus capital improvements minus depreciation deductions—determines the final taxable gain.

For example, if a property was purchased for $200,000, had $50,000 in renovations, and $20,000 in depreciation deductions, the adjusted basis would be $230,000. If sold for $300,000, the taxable gain would be $70,000, and withholding would apply to this amount rather than the full sale price.

Sellers who believe their withholding should be lower than the default calculation can submit Form IT-AFF2 to request a reduction, provided they supply supporting documentation before closing.

Filing Procedures

Form G2-RP must be filed within 30 days of the transaction, along with the withheld tax payment. The buyer or closing agent is responsible for timely submission to the Georgia Department of Revenue. Late filings can result in interest charges and fines.

The form requires details such as the seller’s identification number, property address, total sale price, and the amount withheld. Errors can lead to audits or further inquiries. If mistakes are found after submission, an amended filing may be necessary. Buyers and closing agents should keep proof of withholding and remittance to avoid complications in future tax filings.

Exemptions for Certain Transactions

Some real estate transactions are exempt from withholding. Sales below $20,000 are automatically exempt. Georgia residents can avoid withholding by submitting Form IT-AFF1, certifying their residency.

If a property is sold at a loss, meaning no taxable gain exists, the seller must provide supporting documents such as a settlement statement and cost basis records. Certain corporate entities with permanent business operations in Georgia may also qualify for exemptions if they demonstrate ongoing tax compliance.

Record Retention and Documentation

Both buyers and sellers must keep thorough records to ensure compliance with Georgia tax laws. Buyers and closing agents should retain copies of Form G2-RP, proof of withholding payments, and related correspondence for at least three years.

Sellers should keep records of their original purchase price, capital improvements, depreciation deductions, and any documents used to calculate taxable gain. If an exemption was claimed, copies of affidavits and supporting evidence should be kept to prevent future disputes. When withholding applies, sellers may need these records when filing their Georgia income tax return to claim a credit for the amount withheld.

Failure to maintain adequate documentation can make it difficult to prove tax compliance, potentially resulting in penalties or additional liabilities.