> ## Content Index
> Fetch the complete content index at: https://truenorthboulder.com/llms.txt
> Use this file to discover other available public pages before exploring further.

# Colorado's 2% Nonresident Withholding on a Home Sale
- URL: https://truenorthboulder.com/guides/colorado-nonresident-withholding-home-sale/
- Published: 2026-09-30T09:00:00.000Z
- Updated: 2026-10-10T00:37:08.000Z
- Description: Colorado's 2 percent nonresident withholding is not decided by where you live. It is triggered by the address on two documents in your closing file. Nothing is withheld at $100,000 or less, and it comes off when one of five affirmations on form DR 1083 applies.
- Author: Daniel Hsieh
- Tags: Answer Brief, Selling, Colorado Law

You've moved out of Colorado, the house here is under contract, and somewhere in the closing package sits a form nobody mentioned, or a line quietly removing two percent of the price. It reads like a toll for leaving.

It isn't a toll, and residency isn't what put it there. Colorado's nonresident withholding turns on something narrower than where you live, and it comes off, if you qualify, the way it went on: on a page you sign at closing.

> **The short answer:** When the 1099-S or the disbursement instruction carries a street address outside Colorado, the company handling your closing must withhold **two percent of the price or your net proceeds, whichever is less** (C.R.S. 39-22-604.5(1)). The test is the **address**, not your residency. Nothing is withheld at $100,000 or less, and nothing is required where the closing agent relies in good faith on a **written affirmation** you sign on form **DR 1083** **under penalty of perjury**. There are five, and one is in the past tense: the property "immediately prior to the transfer **was** my (our) principal residence." Which one fits you, if any, is a CPA question. If it has already been withheld, you claim it as a credit on your Colorado return.

## The trigger is an address, not your residency

The statute is almost disappointingly literal. Withholding applies where **the transferor is a person and** the federal return filed for the sale "indicates or the authorization for the disbursement of the funds resulting from such transaction instructs that such funds be disbursed to a transferor with a **last-known street address outside the boundaries of this state** at the time of the transfer of the title to such Colorado real property interest **or to the escrow agent of such transferor**."

That's the whole test for an individual, estate or trust. The statute reaches a corporate seller through a different limb, with its own three-part test. Not domicile, not where you vote or file, not how long you've been gone. Two documents decide it, and either one is enough: the **IRS Form 1099-S** for the transfer and the **authorization for the disbursement of the funds**. An individual, estate or trust is outside that trigger only if both carry a Colorado address. And the address that matters is the transferor's own, not the destination of the wire. Sending the proceeds to a Colorado escrow agent does not change it, because the statute says so in the same sentence. An address can be out of date, and correcting a document is a different job from arguing about a tax.

The amount is the **lesser** of two percent of the price or the net proceeds otherwise due to you: on a $1.2 million sale, $24,000, and never more than you're being paid. "Sales price" is defined in the statute and runs wider than the contract figure: cash, plus the value of any other property transferred, plus any liability the buyer assumes. At **$100,000 or less** there's no withholding and no DR 1083 at all. And [if a relocation company is buying the house from you and reselling it, there are two transfers here](https://truenorthboulder.com/guides/your-employer-is-buying-your-old-house/), and you may not be the transferor on the one that closes. Ask your closer, the escrow officer handling your settlement, which transfer the DR 1083 is being prepared for.

It helps to know who's deciding, because it isn't the state. The duty sits on whoever provides closing and settlement services, usually the title company, and the statute prices the mistake: a title insurance company or its authorized agent that should have withheld and didn't is liable for **$500, or ten percent of what should have been withheld capped at $2,500, whichever is greater**. They're covering their own exposure, not judging your tax affairs, and without a signed affirmation the conservative move is to withhold. On a Colorado [seller's net sheet](https://truenorthboulder.com/guides/seller-net-proceeds-colorado/) this line shows up late and only for some sellers.

You may have already agreed to some of this. Section 15.9.2 of the Commission's standard purchase contract states the withholding in residency terms, hedged with "if not otherwise exempt", and sends you to your own tax adviser. It is also where you authorized the closing company to withhold from your proceeds if withholding is required. If you have wondered who gave them permission, that is where. The contract speaks of residency; the statute quoted above tests an address on two documents. We set those texts beside each other and leave the relationship where the contract leaves it, with a tax adviser.

## Six reasons the withholding comes off the sheet

Page one of [DR 1083](https://tax.colorado.gov/sites/tax/files/documents/DR1083%5F2025.pdf?ref=truenorthboulder.com) carries a box the closer ticks to record why nothing was withheld. Six choices, and five of them are signatures.

| Line 12 box                              | What you would be certifying                                                                                                                                                                          | Who signs                                          |
| ---------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------- |
| a. Colorado residency                    | that "as of the date of closing I am (we are) or the estate or the trust is a resident of the State of Colorado"                                                                                      | transferor or fiduciary, plus spouse if applicable |
| b. Permanent place of business           | that the transferor "is a corporation which maintains a permanent place of business in Colorado"                                                                                                      | a corporate officer                                |
| c. Principal residence                   | that "immediately prior to the transfer it was my (our) principal residence which could qualify for the exclusion of gain provision of section 121"                                                   | transferor, plus spouse if applicable              |
| d. Partnership                           | that the property was sold by an organization defined as a partnership under section 761(a) of the Internal Revenue Code, required to file an annual federal partnership return under section 6031(a) | a general partner                                  |
| e. No tax reasonably estimated to be due | that "there will be no Colorado income tax reasonably estimated to be due on the part of the transferor(s) as a result of any gain realized on the transfer"                                          | transferor, officer or fiduciary, plus spouse      |
| f. No net proceeds                       | nothing. This one is not an affirmation, and nobody signs anything for it                                                                                                                             | no signature                                       |

Quoted from Colorado Department of Revenue form [DR 1083](https://tax.colorado.gov/sites/tax/files/documents/DR1083%5F2025.pdf?ref=truenorthboulder.com), revision 10/01/25: line 12 and the five affirmation blocks on page 2\. Check the revision code at the top of the form; the 2013 edition still circulates.

**The statute names four of these; the form carries five.** Section 39-22-604.5(2)(c) lists residency, permanent place of business, principal residence, and no-tax-reasonably-estimated. The partnership affirmation has no counterpart there; it tracks the fourth exception in the form's own instructions. We raise it so a partnership seller takes it to their CPA rather than meets it at closing, and we draw no conclusion here. DR 1083 is a Department of Revenue form, so a Colorado broker's authority over the Commission's contracts doesn't reach it. Your agent can chase the form down for you; your agent cannot tell you which box.

The no-tax box prints its own warning, worth quoting rather than paraphrasing:

> "Please understand before you sign this affirmation that nonresidents of Colorado are subject to Colorado tax on gains from the sale of Colorado real estate to the extent such gains are included in federal taxable income."

Signing there says nothing about whether Colorado tax is owed on the gain. It says you reasonably estimate none will be due, and the estimate is yours.

Which is why this page describes all five and applies none. Each is sworn under penalty of perjury, and three turn on questions we can't answer for you: **residency** is a domicile question; **principal residence immediately prior to the transfer** is facts and circumstances; **no tax reasonably estimated to be due** needs a real gain computation, with basis, improvements and depreciation recapture if the house was ever a rental. Those belong with a CPA before closing, not at it.

## Present tense in the statute, past tense on the form

You only see this with both documents open.

The statute describes the third affirmation this way: "That the Colorado real property being conveyed **is** the principal residence of the transferor."

The form asks you to swear this: "I hereby affirm that I am (we are) the transferor(s) of the property described on this DR 1083 and **immediately prior to the transfer it was** my (our) principal residence which **could qualify for** the exclusion of gain provision of section 121 of the Internal Revenue Code."

Present tense in the law, past tense on the page you sign. And the page you sign is the one that carries the words you are swearing to: what relieves the closing agent is good-faith reliance on the affirmation the transferor executes, and that is the one printed on DR 1083\. It's worded for somebody who has already moved out.

What it doesn't settle is the harder half. "Immediately prior to the transfer" and section 121 are **two different tests**, joined by a loose phrase: *could qualify for*. Section 121 looks back five years; "immediately prior to the transfer" points at the moment before closing. A seller who moved out two years ago and rented the house since may clear one and fail the other, and the form doesn't say which governs, or whether both must hold.

We aren't going to resolve it for you. You are the one swearing to the answer. Section 121 itself is in our [Colorado capital-gains guide](https://truenorthboulder.com/guides/capital-gains-home-sale-colorado/), and reading it tells you whether you clear **section 121**, not whether you clear the sentence on the form. That second question is your CPA's.

## What signing it actually does

Perjury isn't the form being theatrical. It's statutory: no withholding is required where the agent in good faith relies on "a written affirmation executed by the transferor, **certifying under penalty of perjury**" one of the listed grounds.

And the page doesn't stay in the closing file. Under **Rule 39-22-604.5** at 1 CCR 201-2, adopted **9 January 2026** and effective **2 March 2026**, an agent that withholds nothing in reliance on an affirmation must, **within thirty days of closing**, "submit a written affirmation executed pursuant to section 39-22-604.5(2)(c), C.R.S., on the forms prescribed by the Department." What you sign goes to the Department of Revenue.

If withholding does happen, the money isn't gone. It's remitted on form DR 1079 within thirty days and you claim it as a credit on your Colorado return for the year of the transfer, where the estimated-tax rules treat it as a payment of estimated tax. A credit is not automatically a refund: it offsets whatever Colorado tax the sale actually generates, and only the excess comes back. Whatever does come back arrives at filing rather than at closing, which bites when those proceeds were funding the next purchase, and a sale that closes in January lands on a return for a year that has not finished yet. California runs a comparable regime at a [different rate, on a different form](https://truenorthboulder.com/guides/moving-to-boulder-county-from-california/).

Three things worth doing, in this order:

- **Read the blank DR 1083 before anyone sends you one** (the Department publishes it free), so your CPA question is about the words you will actually sign. Then **tell your closer at escrow-open that you'll be** [**closing from an out-of-state address**](https://truenorthboulder.com/guides/closing-on-a-colorado-home-from-out-of-state/)**.** The two percent is already on your settlement statement before it reaches you, and taking it off there means a revised statement and a revised wire. Once it is withheld and remitted there is no undo at the closing table, and the only route left is your Colorado return.
- **The address that decides this lands at escrow-open.** Both documents the trigger reads are built from the seller information sheet your title company sends then. That is the page you actually fill in, so correct a stale address there. It will not change the tax: the withholding is a prepayment against a Colorado return a nonresident still files.
- **Send the three questions above to a CPA now**, or to a tax attorney. We can't answer them, and the form takes a signature, not an explanation.

*This is general information for Colorado sellers, not tax, legal, or financial advice; confirm your own situation with a CPA or a Colorado attorney before you sign anything. True North Boulder is a real-estate team with eXp Realty.*

Common questions

## Frequently asked

I already moved out of Colorado. Can I still sign the principal-residence affirmation?+ 

That is the question for your CPA, and worth asking early. What we can tell you is how the form reads, because the wording surprises people: the affirmation is in the past tense, covering a property that 'immediately prior to the transfer' was your principal residence. Whether your own timeline satisfies it is a facts-and-circumstances judgment, sworn under penalty of perjury, so it isn't a box to tick on a general impression.

If Colorado withholds the money, do I get it back?+ 

It's creditable, which isn't quite the same as recoverable, and it lands on the filing calendar rather than at the closing table. The agent remits it on form DR 1079 within thirty days, and you claim it as a credit on your Colorado return for the year of the transfer. The consequence is a timing one: if those proceeds were funding your next down payment, the credit arrives months too late to help.

The house is in my LLC, or a trust. Which box do I sign?+ 

Read the five again and notice what is missing: they name an individual, an estate, a trust, a corporation and a partnership. None of them names an LLC. Which one reaches you, if any, turns on how the LLC is taxed, and disregarded, partnership and corporate election are three different answers, with the corporate box turning on a statutory three-part test. Note too what box a actually asks about an estate or trust: whether the estate or the trust itself is a Colorado resident, not where the heirs or beneficiaries live. CPA, before the packet arrives.

Sources & notes 
- **The statute.** C.R.S. § 39-22-604.5, Withholding tax – transfers of Colorado real property – nonresident transferors, read verbatim in the *Colorado Revised Statutes 2026*, current through the 75th General Assembly’s Second Regular Session, published by the Office of Legislative Legal Services, [Title 39](https://olls.info/crs/crs2026-title-39.htm?ref=truenorthboulder.com). The official 2026 code publishes each title as one large document, so that is a locator rather than a link that lands on the section. Subsection (1): withhold “two percent of the sales price … or the net proceeds resulting from such conveyance, whichever is less.” Subsection (1)(a): the trigger, quoted in the body. Subsection (2)(a): no withholding where the sales price “does not exceed one hundred thousand dollars.” Subsection (2)(b): the foreclosure and deed-in-lieu carve-out. Subsection (2)(c): good-faith reliance on a written affirmation “executed by the transferor, certifying under penalty of perjury” one of four listed grounds. Subsection (3): agent liability, “the greater of” five hundred dollars or “ten percent of the amount required to be withheld … not to exceed two thousand five hundred dollars”; note the cap attaches to the ten-percent prong, not to the greater-of result. Subsection (6)(f) defines “sales price.” The codified source note ends at L. 2016, when SB 16-189 amended subsection (2)(c)(III), the principal-residence affirmation.
- **The form.** Colorado Department of Revenue, [DR 1083, Information with Respect to a Conveyance of a Colorado Real Property Interest](https://tax.colorado.gov/sites/tax/files/documents/DR1083%5F2025.pdf?ref=truenorthboulder.com), revision **10/01/25**, read in full. Line 12 lists six reasons withholding was not made; page 2 carries five affirmation blocks, each closing “Signed under the penalty of perjury.” **Note the two lists run in different orders:** principal residence is box *c* on page 1 and the *fourth* signature block on page 2, sitting below Sale by Partnership rather than above it. The instructions give the DR 1079 remittance within thirty days and state that amounts withheld “may be claimed by the transferor as a credit against tax on their Colorado income tax return.” The Department’s site blocks automated retrieval, so the form was retrieved with a browser user agent, 2026-09-12\. The **2013** edition still ranks highly in search and appears in the same result set; the revision code prints at the head of page 1 and of each instructions page, and not at all on page 2.
- **The contract.** Colorado Real Estate Commission form **CBS1, Contract to Buy and Sell Real Estate (Residential)**, adoption date 5 August 2025, mandatory use date 1 January 2026, § 15.9.2 (“Colorado Withholding”), read verbatim at the promulgated form: “The Colorado Department of Revenue may require a portion of the Seller’s proceeds be withheld after Closing when Seller will not be a Colorado resident after Closing, if not otherwise exempt. Seller agrees to cooperate with Buyer and Closing Company to provide any reasonably requested documents to verify Seller’s status. If withholding is required, Seller authorizes Closing Company to withhold such amount from Seller’s proceeds. Seller should inquire with Seller’s tax advisor to determine if withholding applies or if an exemption exists.” Quoted for what it allocates between the parties: a heads-up, a cooperation covenant, the authorization to withhold, and a routing instruction to the seller’s own tax adviser. The statute’s own trigger, quoted in the body, is keyed to an address rather than to residency; we set the two texts side by side and do not read the relationship between them. It carries no deadline and appears in no Dates and Deadlines row.
- **The 2026 rule.** Rule 39-22-604.5, Colorado Income Tax Withholding for Nonresident Transfers of Colorado Real Property, at 1 CCR 201-2 (Department of Revenue, Taxation Division). Secretary of State CCR [eDocket, tracking number 2025-00400](https://www.coloradosos.gov/CCR/eDocketDetails.do?trackingNum=2025-00400&ref=truenorthboulder.com): hearing 10/02/2025, adopted **01/09/2026**, Colorado Register publication 02/10/2026, effective **03/02/2026**. The quoted requirement is from the [adopted rule text](https://www.coloradosos.gov/CCR/Upload/AGORequest/AdoptedRules02025-00400.doc?ref=truenorthboulder.com) filed with that docket. The Department’s own [adoption notice](https://tax.colorado.gov/news-article/adopted-colorado-income-tax-withholding-rule?ref=truenorthboulder.com) independently gives the same date; a secondary source reporting 01/21/2026 is supported nowhere in the official record.
- **The credit as estimated tax.** C.R.S. § 39-22-605(8)(a), same 2026 edition: the credit allowed under § 39-22-604.5 “shall be deemed a payment of estimated tax.”
- **What this page is not telling you.** It describes all five affirmations and applies none of them to any reader. Whether you are a Colorado resident, whether a property was your principal residence immediately prior to a transfer, and whether Colorado tax is reasonably estimated to be due are each questions for a CPA, and each affirmation is a sworn statement. We also do not resolve how the form’s “immediately prior to the transfer” test relates to section 121’s own qualifying tests; the form couples them loosely and we report the coupling rather than reading it. DR 1083 is a Department of Revenue form, so a Colorado broker’s limited authority over Commission-approved real-estate forms does not extend to it. The Commission’s own contract is a different matter: § 15.9.2 of the standard purchase contract is a Commission-approved form, and we describe what it says without ruling on how its wording relates to the statute’s.
- **Deliberately out of scope:** section 121 itself, which is a separate guide, linked; the computation of any reader’s gain or tax; and California’s Form 593 regime, which is its own piece, linked.