Tax Type
Corporation Income Tax
Description
Domestic and Foreign Corporations; Nonresident Real Property Owner Registration
Topic
Taxpayers' Remedies
Date Issued
02-25-1991
February 25, 1991
Re: Request for Ruling: Nonresident Real Property owner Registration
Dear***************
This will reply to your letter dated October 16, 1990 in which you request a ruling on whether the Form R-5 should be filed by any of the parties under the specific circumstances that you have presented.
FACTS
A corporation that is not organized under Virginia law enters into a contract with a Virginia resident and real property owner. The corporation acquires the contract right to sell the property. The company then markets the property and finds an interested buyer. The corporation does not itself receive any interest through any deed and does not otherwise appear in the chain of title. At the closing. the company presents a deed from the prior owner to the buyer it has identified. The prior owner has. in most cases. relocated from Virginia at the time of the actual closing.
RULING
Registration will be required from a nonresident payee only when receiving payments from the sale or exchange of real property located in Virginia which involves the transfer of present or future fee simple title.
The situation which you describe resembles a sale of real property via the services of a relocation service company. The regulations under Va. Code § 58.1-317 are currently being drafted. It is anticipated that the regulations will address these transactions. specifically. As drafted:
-
- If gross proceeds are paid or advanced to [a property owner] by ... a relocation service. the payment to the [property owner] and the ultimate sale of the property may be treated as either one sale or two separate sales for the purpose of registration.
-
- When the [property owner] treats the ultimate sale as a sale on his federal income tax return and ... the relocation service is [not] required to treat it as a sale for income tax purposes. then only the sale from the [property owner] to the ultimate purchaser will be subject to the registration requirements.
When the . . relocation service is required to treat [an] advance and the ultimate sale as a purchase and sale by it for federal income tax purposes. then each transaction. the sale from the [property owner] to ... relocation service and the sale from the ... relocation service to the ultimate purchaser. will be subject to the registration requirement.
- When the [property owner] treats the ultimate sale as a sale on his federal income tax return and ... the relocation service is [not] required to treat it as a sale for income tax purposes. then only the sale from the [property owner] to the ultimate purchaser will be subject to the registration requirements.
I hope that the foregoing has responded to your inquiries. However. if you need further assistance, please contact the department. We will ensure that you receive a copy of the first exposure draft of the regulation, which is scheduled to be distributed on January 9, 1991.
Sincerely.
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner