When escrow holds back money for Oregon tax or federal FIRPTA, who it applies to, how much it is, and the exemptions sellers should know before closing.
Two different withholding rules can come up when you sell a home in Oregon. One is Oregon's real property withholding, which applies only to certain nonresident sellers. The other is the federal FIRPTA rule, which applies only when the seller is a foreign person.
If you live in Oregon, you are an exempt transferor under the Oregon rule, so nothing is withheld for Oregon tax for that reason. If you are not a foreign person, you give escrow a signed certificate of non-foreign status before closing. The questions below cover the details, including what happens when you sell for less than you paid.
This guide explains how the rules work. It is not tax advice, so please confirm your numbers with a CPA or tax attorney before closing. If you are selling from another state, our guide to selling your Bend home from out of state covers the rest of the process, and what it costs to sell a house in Bend walks through seller closing costs.
Questions
Does escrow withhold Oregon tax when I sell my home?
Only for certain sellers. In Oregon, escrow has to withhold for Oregon tax only when the seller is a nonresident individual, or a C corporation that is not domiciled in or registered to do business in Oregon. An Oregon resident seller is an exempt transferor, and nothing is withheld for this reason.
How much does escrow withhold for a nonresident seller?
Unless an exemption applies, the escrow agent withholds the least of 4 percent of the sale price, the seller's net proceeds, or 8 percent of the gain that is includable in Oregon taxable income.
What exemptions apply to Oregon withholding?
Exemptions include a sale price of $100,000 or less, a principal residence where the entire gain is excludable under federal IRC Section 121, and the seller's written affirmation on Form OR-18-WC that they are unlikely to owe Oregon tax.
Do I owe Oregon withholding if I sell for less than I paid?
The Oregon tax is on gain, not on the sale price. The Department of Revenue's own instructions give the example of a California resident who sells Oregon property at a loss with no gain, and say that seller does not need to complete Form OR-18-WC. But gain is measured against your adjusted basis (generally what you paid plus improvements, minus depreciation) after selling costs, so a rental you depreciated can show a gain even if it sells for less than you paid. Please confirm your numbers with a CPA or tax attorney before closing.
What does the Oregon sale agreement say about withholding?
The standard Oregon sale agreement (OREF 001) has the buyer and seller cooperate with escrow by signing whatever escrow reasonably needs to follow the Oregon withholding rules.
When does FIRPTA apply to a home sale?
The federal FIRPTA rules apply only when the seller is a foreign person. In that case the standard rule is that the buyer withholds 15 percent of the amount realized.
How do I show escrow that I am not a foreign person?
Under the standard Oregon sale agreement, a seller who is not a foreign person gives escrow a signed certificate of non-foreign status before closing. A seller who does not is presumed to be a foreign person. The sale agreement also names a separate FIRPTA advisory, OREF 092.
Are there exceptions to FIRPTA withholding?
Yes. One the IRS lists: withholding is generally not required when the buyer is an individual who acquires the home for use as a residence and the sales price is not more than $300,000, as long as the buyer or a family member has definite plans to live there at least half of the days it is used in each of the first two years after the sale, and the IRS notification requirements are met. Ask your escrow officer or a tax adviser how the rule and its exceptions apply to you.
Have a question about your own sale? Talk with a Ryan Realty broker, and we will walk you through it.
Sources
- ORS 314.258, Oregon real property withholding: Oregon Revised Statutes, chapter 314
- Oregon Department of Revenue, Form OR-18-WC Instructions (150-101-284-1, Rev. 09-03-25): instructions PDF
- Oregon Department of Revenue, Form OR-18-WC (150-101-284, Rev. 06-03-25): form PDF
- Oregon Department of Revenue, Publication OR-NR-REAL (150-101-023, Rev. 09-08-23): publication PDF
- IRS, FIRPTA Withholding
- IRS, Exceptions from FIRPTA Withholding
- OREF 001 Residential Real Estate Sale Agreement (Released 01/2026), Sections 39.1 and 39.2
- OREF 092 Advisory Regarding FIRPTA Tax (Released 01/2026)
Matt RyanOwner & Principal Broker at Ryan Realty.
