Tax Type
General Provisions
Description
Nonresident sale of real property; Role of relocation company
Topic
Property Subject to Tax
Date Issued
08-31-1992
August 31, 1992
Re: Request for Ruling: Nonresident Real Property Owner Registration
Dear******************
This will reply to your original letter of March 21, 1991, in which you request a ruling on how Va. Code §58.1-317 applies to relocation companies.
FACTS
***********(the "Company") is a relocation company which engages in the business of acquiring homes in Virginia and other states from individuals who are in the process of relocating to a new region for employment purposes. The homes acquired by the Company are typically under contract with a third party purchaser. An employer will hire the Company to administer the resale closing of an employee's home with the purchaser. The employee will convey a deed in blank along with a power of attorney to the Company which authorizes the Company to convey the property to a purchaser on behalf of the employee.
The conveyance of the property is directly from the employee to the purchaser, the Company never appears in the chain of title. Except for the fee it charges for its services, the Company does not have any direct financial interests in the properties sold.
RULING
Va. Code §58.1-317 requires that a real estate reporting person, as defined in Section 6045(e) of the Internal Revenue Code and the regulations thereunder, shall obtain from a nonresident payee a completed registration form. The real estate reporting person shall retain a copy of the form in his files and transmit the original form to the department.
Generally, under federal law and regulations the real estate reporting person is the person that is responsible for closing the transaction i.e. the settlement agent, the transferor's attorney or the transferee's attorney, or the title or escrow company.
Virginia has taken the position that in the event that a Uniform Settlement Statement is used the party listed as the settlement agent will be treated as the reporting person. Otherwise, the person that is responsible for closing the transaction will be treated as the reporting person. The first listed of the following listed parties will be treated as being responsible for closing a particular transaction and, therefore, the reporting person:
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- Transferee's attorney if he is present at the occasion of the delivery of the purchaser's note or a significant portion of the sale proceed to the nonresident payee, or such attorney prepared or directed the preparation of the documents which transfer the legal or equitable title to the purchaser;
The nonresident payee's attorney if he is present at the occasion of the delivery of the purchaser's note or a significant portion of the cash proceeds to the nonresident payee, or such attorney prepared or directed the preparation of the documents which transfer the legal or equitable title to the purchaser;
The distribution title or escrow company that is most significant in terms of gross proceeds disbursed;
The mortgage lender;
The nonresident payee's broker;
Transferee's broker; or
Transferee.
- Transferee's attorney if he is present at the occasion of the delivery of the purchaser's note or a significant portion of the sale proceed to the nonresident payee, or such attorney prepared or directed the preparation of the documents which transfer the legal or equitable title to the purchaser;
If you have any further questions regarding this matter, please do not hesitate to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/5188O
Rulings of the Tax Commissioner