WHEN GEORGIA TAKES ITS SHARE: Withholding for Non-Resident Sellers
Selling property in Georgia? If you’re not a Georgia resident, you might be in for a surprise at closing: a portion of your sale proceeds could be withheld and sent straight to the State of Georgia.
Let’s walk through why, how, how much, and the exceptions—plus an example so you can see exactly how it works.
Why does Georgia withhold from non-resident sellers?
When you sell property in Georgia, the state expects to collect income tax on any profit you make from the sale. If you live out of state, Georgia can’t easily chase you down later to make sure you pay up.
So, instead of taking that risk, Georgia law requires the buyer (or the closing attorney on the buyer’s behalf) to withhold part of the money at closing and send it directly to the Department of Revenue. Think of it as Georgia saying, “We’ll take our cut now, thank you.”
How much gets withheld?
The standard rate is 3%, and it’s calculated on the lesser of:
The total sale price, or
The actual gain (profit) you make on the sale
If you don’t complete and provide an Affidavit of Seller’s Gain (Form IT-AFF2), the calculation is based on the full sale price—which can be a big difference if your profit is much smaller.
If the calculated withholding is more than what you’re actually walking away with at closing, Georgia only takes the net proceeds (so you won’t leave owing money at the table).
Exceptions: When withholding isn’t required
You might not owe any withholding at all if:
It’s your principal residence under IRS rules, and your gain is excluded from income
The purchase price is under $20,000
The tax owed would be less than $600, and you’ve provided the proper affidavit
It’s a foreclosure transfer (without extra consideration)
The sale is to or by a government agency, a tax-exempt entity, or a qualified insurance company
It’s part of a 1031 like-kind exchange
What happens after the withholding?
At closing, the buyer or closing attorney files Form G-2RP with the Georgia Department of Revenue and sends in with the withheld funds. You’ll get a copy of this form at closing.
When you file your Georgia non-resident income tax return, you’ll report the sale. If too much was withheld, you can request a refund; if too little, you’ll pay the difference.
Example: $30,000 sale with four non-resident sellers
Scenario:
Property sells for $30,000
Four sellers, all live outside Georgia
No Affidavit of Seller’s Gain is provided (so withholding is based on the sale price, not profit)
Step 1 – Calculate withholding
3% of $30,000 = $900 total withholding
Step 2 – Divide among sellers
Because there are four equal sellers:
$900 ÷ 4 = $225 withheld per seller
Step 3 – What this looks like at closing
Let’s say your share of the net sale proceeds after paying off any liens, taxes, and fees is $5,500. From that amount, the closing attorney withholds $225 and sends it to Georgia.
You walk away with $5,275 in hand, and $225 already sent to the state on your behalf.
Step 4 – After closing
You’ll get a copy of Form G-2RP showing the $225 withholding. When you file your Georgia non-resident tax return for the year, you’ll use that form to claim credit for the tax already paid.
Plain English takeaway
If you sell Georgia property as a non-resident, the state wants to make sure it gets its income tax—so it takes a percentage at closing. Filing the right affidavit can reduce the amount withheld, and certain sales don’t require withholding at all.
Without the affidavit, it’s a simple 3% of the sale price, split among the sellers if there’s more than one.
Need help?
If you’re selling Georgia property and live out of state, a tax professional can help you:
See if you qualify for an exemption
Calculate withholding based on your actual gain (not the full sale price)
Prepare the right forms so you keep more of your proceeds now instead of having withholding held from your proceeds, if applicable
