Big Cut in RI Nonresident Withholding is Now in Effect!!

As stated by the Rhode Island Association of Realtors: 

"The Rhode Island tax imposed on long-term capital gains was cut from 5% to 1.67% as a result of legislation that was enacted in 2001. The lower rate applies to the gain on investment property held for more than five years. Accordingly, the Rhode Island Division of Taxation has changed its policy concerning the amount required to be withheld from nonresident sellers at closing who have held the property for more than five years. This change is incorporated in a revised Form RI- 73-1 Election to Have Withholding Based on Gain.

It is important to keep in mind that the lower withholding requirement does not apply to all sales of real estate by nonresident sellers. The 6% withholding requirement on property held for five years or less is still in effect. Also, nonresident sellers who sell real estate that qualifies as a principal residence and are eligible to exclude the gain for federal income tax purposes are also eligible to exclude the gain for Rhode Island state income tax purposes. Generally, nonresident sellers must have owned and lived in the property for at least 2 of the last 5 years to qualify for the exclusion. Form RI 71.3 must be also be filed in a timely manner with the Rhode Island Division of taxation to be eligible for full exclusion."

Are you wondering how this new tax cut may affect you?

Feel free to contact me with any questions:

John Cain
Broker Associate
Keller Williams Realty of Newport

www.MarketWatchRI.com