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Colorado 2% Tax for Out of State Real Estate Sellers

August 25, 2017 By Chris Kopf

Colorado 2% Tax for Out of State Real Estate SellersColorado 2% Tax for Out of State Real Estate Sellers

Are you a second homeowner in Crested Butte, Colorado and an out-of-state owner? Did you know you are subject to a 2% Tax on the sale of your home?

It is the standard practice of Title Companies to choose to deduct 2% of the SALES PRICE of the real estate transaction for out-of-state owners. This frustrates and baffles me – because the tax is ONLY due on the NET PROCEEDS from the sale.

My correspondence to a Title Company on behalf of my Crested Butte Seller client:

“The out of state seller is required to pay 2% only on the gain of the sale of the property. I think it is not serving the public (our Seller clients) for  Title Company to automatically deduct 2% of the Sales Price on the Seller Settlement Statement, because this assumes the Sales price is 100% “gain” or profit.

I would think it is pretty simple for Title Company to obtain the recorded purchase price of the property in most cases* and at least subtract this amount, plus closing costs and commissions on the transaction to come up with a more realistic number that is then multiplied by the 2%.

* yes I realize if a seller bought land and built a home there is no way to know what the effective basis is. And yes the seller may also have spent $ on remodel that they could also add to their basis – not suggesting you go down this path…

Per Instructions on the back of form DR1083 Information with Respect to a Conveyance of a Colorado Real Property Interest – https://www.colorado.gov/pacific/sites/default/files/DR1083.pdf

“Normally Colorado tax will be due on any transaction upon which gain will be recognized for federal income tax purposes. Gain will normally be recognized for federal income tax purposes any time the selling price of the property exceeds the total of the taxpayer`s adjusted basis in the property, plus the expenses incurred in the sale of the property. The taxpayer`s adjusted basis of the property will normally be the taxpayer`s total investment in the property, minus any depreciation thereon he has previously claimed for federal income tax purposes.”

DR 1083 (10/17/13), COLORADO DEPARTMENT OF REVENUE, Denver, CO 80261-0005, www. TaxColorado.com

Colorado 2% Tax for Out of State Real Estate Sellers

The Response from the Title Company’s Legal Department:

“The withholding tax is made in anticipation of the Colorado income tax that will be due on the gain from the sale (quoting from the instructions on the form). It is essentially a prepayment of the tax and the seller/taxpayer must then submit a tax return to claim any refund. The procedure is very similar to the FIRPTA withholding tax which is also a prepayment on any federal income tax which may be due.”

Colorado 2% Tax for Out of State Real Estate SellersI am not a CPA nor an Attorney – but I can do math

I am not a CPA nor an Attorney, but I can do math – and the Sales Price will never be 100% Gain or Net Proceeds on the Sale of a property in Colorado unless the basis is $0.00.

So it would be my suggestion that if you are a seller and reside out of the state of Colorado, then you might want to consider instructing the Title Company that you will file with the State of Colorado yourselves.

Specifically – that you elect to sign the Affidavit DR 1083 – and will be checking box “e” “Affirmation of no tax reasonably estimated to be due to no gain on sale signed” (Otherwise the Title Company will withhold and disburse 2% of the SALES PRICE (not the gain) to the Colorado Dept. of Revenue… and then you will have to go file with the State of Colorado and ask for YOUR money back (and months later you may get it back).

Chris Kopf Crested Butte Real Estate AgentHow can I help you with Your Crested Butte Co Real Estate Needs?

This post Colorado 2% Tax for Out of State Real Estate Sellers and my level of detail is representative of what you can expect from me as your Real Estate Agent.

I have consistently been among the top real estate agents in Crested Butte and among the top 2% of the 87,000 Coldwell Banker Agents worldwide and I strive to exceed client expectations. If you are interested in finding out what your property is worth, or considering me to represent you as a Buyer, I would appreciate the opportunity to earn your business (or that of a friend you think I could help).

Visit www.chriskopf.com. Phone: (970) 209-5405, or chriskopf@bighornrealty.com

Click here to see  Crested Butte 3D Walkthrough Home Tours

Click here to do an advanced search the Crested Butte MLS for properties for sale in the Crested Butte area.

For more questions regarding Selling Your Crested Butte Home or the Crested Butte Real Estate Market contact:
Chris Kopf
Global Luxury Property Specialist
Coldwell Banker Bighorn Realty
(970) 209-5405
chriskopf@bighornrealty.com

 

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Chris Kopf, Coldwell Banker Mountain Properties
305 6th Street
Crested Butte, CO 81224
  • Chris.Kopf@CBMP.com
  • (970) 209-5405

Testimonials

Bobby Nichols

"The first moment we met Chris, my wife and I knew he was all about what is happening in real estate sales in Crested Butte. He knows his job, the marketplace and the innovative ways to market your home in today's electronic internet space. A real professional that understood us and our needs in handling a very successful sales transaction. "

 
Crested Butte Real Estate by Chris Kopf
2015-02-11T13:45:19-07:00
"The first moment we met Chris, my wife and I knew he was all about what is happening in real estate sales in Crested Butte. He knows his job, the marketplace and the innovative ways to market your home in today's electronic internet space. A real professional that understood us and our needs in handling a very successful sales transaction. "  
https://chriskopf.com/testimonials/bobby-nichols/

Jeff Hollings

Chris is outstanding! We recently bought a second home in Crested Butte and Chris did a great job throughout the whole process. He has a thorough understanding of the market and the benefits and drawbacks of various locations. He was very patient with us as our preferences evolved throughout the search. He gave us valuable information on which to negotiate the purchase. He had great follow-up during the inspection/closing process (when we were not in town) and made sure all of the commitments made by the seller were properly completed.
Crested Butte Real Estate by Chris Kopf
2015-02-11T13:46:48-07:00
Chris is outstanding! We recently bought a second home in Crested Butte and Chris did a great job throughout the whole process. He has a thorough understanding of the market and the benefits and drawbacks of various locations. He was very patient with us as our preferences evolved throughout the search. He gave us valuable information on which to negotiate the purchase. He had great follow-up during the inspection/closing process (when we were not in town) and made sure all of the commitments made by the seller were properly completed.
https://chriskopf.com/testimonials/jeff-hollings/

James Brennan

This was our first experience trying to purchase additional land with hopes of building a home. Chris was tremendously helpful throughout the entire process and his professionalism showed.
Crested Butte Real Estate by Chris Kopf
2014-10-14T17:59:24-06:00
This was our first experience trying to purchase additional land with hopes of building a home. Chris was tremendously helpful throughout the entire process and his professionalism showed.
https://chriskopf.com/testimonials/james-brennan/

Jane Saltzman

Chris was terrific to work with. The house sold faster then I ever expected! He was particularly helpful for this second home owner that couldn't always get there to take care of house issues. Thank you Chris!!!
Crested Butte Real Estate by Chris Kopf
2015-02-11T13:49:37-07:00
Chris was terrific to work with. The house sold faster then I ever expected! He was particularly helpful for this second home owner that couldn't always get there to take care of house issues. Thank you Chris!!!
https://chriskopf.com/testimonials/jane-saltzman/

Georges Lussier

The thought of a short sale was intimidating, but Chris made the experience very easy with lots of guidance from start to finish. I would highly recommend Chris for any Real Estate need buying or selling.
Crested Butte Real Estate by Chris Kopf
2014-10-14T18:05:40-06:00
The thought of a short sale was intimidating, but Chris made the experience very easy with lots of guidance from start to finish. I would highly recommend Chris for any Real Estate need buying or selling.
https://chriskopf.com/testimonials/georges-lussier/

Frank Stringer

Chris Kopf is a wonderful person to work with on any real estate matter you may have in Crested Butte. He is extremely knowledgeable of all elements of the Crested Butte area. He helped us recently to buy a new second home in Skyland and the entire experience was first class under Chris's guidance. I would highly recommend him to anyone who has a real estate need in Crested Butte.
Crested Butte Real Estate by Chris Kopf
2015-02-11T13:51:04-07:00
Chris Kopf is a wonderful person to work with on any real estate matter you may have in Crested Butte. He is extremely knowledgeable of all elements of the Crested Butte area. He helped us recently to buy a new second home in Skyland and the entire experience was first class under Chris's guidance. I would highly recommend him to anyone who has a real estate need in Crested Butte.
https://chriskopf.com/testimonials/frank-stringer/

Paul & Julie Keesee

Chris was quite helpful in showing us homes in the area we were interested in and contacted us when new listings were available. We not only consider him our realtor but also a friend.
Crested Butte Real Estate by Chris Kopf
2014-10-14T18:05:59-06:00
Chris was quite helpful in showing us homes in the area we were interested in and contacted us when new listings were available. We not only consider him our realtor but also a friend.
https://chriskopf.com/testimonials/paul-julie-keesee/

Jim & Sandra Wickham

Chris' patience and persistence paid off for us in finding the right house for the right price. We would highly recommend Chris to any potential buyer.
Crested Butte Real Estate by Chris Kopf
2014-10-14T18:06:18-06:00
Chris' patience and persistence paid off for us in finding the right house for the right price. We would highly recommend Chris to any potential buyer.
https://chriskopf.com/testimonials/jim-sandra-wickham/

Tom & Mary Aton

It was a great experience working with Chris, after showing me what I thought I wanted, he advised me of the pros and cons on the different condos and found one that I am thrilled with.
Crested Butte Real Estate by Chris Kopf
2014-10-14T18:06:31-06:00
It was a great experience working with Chris, after showing me what I thought I wanted, he advised me of the pros and cons on the different condos and found one that I am thrilled with.
https://chriskopf.com/testimonials/tom-mary-aton/

Dan Aquaviva

This agent has a very strong knowledge of the local area. He was very helpful in screening properties for potential purchase.
Crested Butte Real Estate by Chris Kopf
2014-10-14T18:05:26-06:00
This agent has a very strong knowledge of the local area. He was very helpful in screening properties for potential purchase.
https://chriskopf.com/testimonials/dan-aquaviva/
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Crested Butte Real Estate by Chris Kopf

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