How to Complete Georgia Form NRW-Exemption: Nonresident Affidavit of Exemption

Georgia Form IT-AFF3, the Seller’s Certificate of Exemption, is what a nonresident uses to stop the buyer from withholding 3 percent of the sale price on Georgia real estate. If any one of the twelve exemption categories on the form fits your sale, you initial that line, sign the form, and deliver it to the buyer or closing attorney before closing. The form is a free download from the Georgia Department of Revenue.¹

Why the Form Exists

Under O.C.G.A. § 48-7-128, a buyer purchasing Georgia real property from a nonresident must withhold 3 percent of the purchase price and remit it to the Department of Revenue.² The rule reaches individuals, trusts, partnerships, corporations, and unincorporated organizations that are not Georgia residents. IT-AFF3 is the document that tells the buyer the sale is exempt from that withholding, so your net proceeds come to you in full at closing.

The form’s own instructions describe it as “provided for the convenience of the seller and the protection of the buyer.” Technically it is not required by law, but without it the buyer has no record showing why no tax was collected, and buyers rarely close without one when the seller is nonresident.¹

The Twelve Exemptions

Only one of these needs to apply to your sale. Read them carefully; some depend on who the parties are, some on the dollars involved, and some on how the sale is being taxed federally.¹

The property is your principal residence and none of the gain is required to be included in your federal adjusted gross income.
You are a mortgagor conveying the property to a mortgagee through foreclosure or a transfer in lieu of foreclosure, with no additional consideration.
The seller or buyer is an agency or authority of the United States or the State of Georgia.
The seller or buyer is Fannie Mae, Ginnie Mae, or Freddie Mac.
The seller or buyer is a private mortgage insurance company.
The total purchase price is less than $20,000.
The seller is subject to withholding under O.C.G.A. § 48-7-129 and a composite return has been or will be filed on the seller’s behalf.
The seller is a tax-exempt organization and the income from the sale is not subject to federal or state income tax.
The seller is an insurance company that pays Georgia a tax on its premium income.
The transaction is a like-kind exchange and the income is not subject to federal or state income tax.
The withholding liability is less than $600 as shown on a completed Affidavit of Seller’s Gain (Form IT-AFF2).
For taxable years beginning on or after January 1, 2022, the seller qualifies for and has made or intends to make the election to be taxed at the entity level under O.C.G.A. § 48-7-21 or 48-7-23.

The $600 withholding-liability line is the one that catches most low-gain and loss sales. If you are selling at a loss or at a very modest gain, 3 percent of that gain is under $600, and the sale qualifies. You document the gain figure on Form IT-AFF2 and attach it to the IT-AFF3 that initials this box.³

Filling the Form Out

The top section asks for identifying information. Enter:

Your full legal name. If the seller is a disregarded single-member LLC, list both the LLC and its owner.
Your Social Security Number or Federal Employer Identification Number.
Your spouse’s identification number if the property is jointly owned.
Your mailing address: street, city, state, and ZIP.

Below that, the twelve exemption statements appear in a numbered list. Initial the one that applies. Do not initial more than one unless more than one genuinely applies; one is enough to exempt the whole transaction. Then sign and date at the bottom. If you are signing for an entity, add your title.

The signature is sworn. The information on the form must be accurate, because a false statement carries the same consequences as perjury.

Delivering It at Closing

Give the signed form to the buyer or the closing attorney at or before closing. In most Georgia real estate transactions the closing attorney acts as the withholding agent and needs the certificate in hand before disbursing proceeds. Once a properly executed IT-AFF3 is on file, nothing is withheld from your check.

Keep a copy. The buyer should keep one too. The Georgia regulation describes the form as a document “executed and provided to the parties for record keeping purposes,” and the buyer relies on it to show good faith if the Department of Revenue later audits the transaction.³

If None of the Twelve Fit You

IT-AFF3 is not the only way to avoid withholding. Two other paths exist, and the right one depends on your situation.

The first is deemed-resident status under O.C.G.A. § 48-7-128(a). You are not domiciled in Georgia but you can still be treated as a resident for this withholding rule if you meet all four of the following:²

You filed Georgia income tax returns, or received extensions, for the two tax years immediately before the year of sale.
You are in business in Georgia and will continue substantially the same business after the sale, or you have remaining Georgia real property at closing worth at least as much as the withholding liability (measured by the 100 percent property tax assessment).
You will report the sale on a Georgia return for the current year and file it by its due date.
If you are a corporation or limited partnership, you are registered to do business in Georgia.

Sellers who meet all four conditions use Form IT-AFF1, the Affidavit of Seller’s Residence, instead of IT-AFF3.⁴ Both forms produce the same closing-table result; they just document different legal grounds. IT-AFF1 establishes that you count as a resident, while IT-AFF3 establishes that the transaction itself is exempt.

The second path is to reduce the withholding rather than eliminate it. If you have a modest gain but it exceeds the $600 threshold, you can file Form IT-AFF2 to swear to the actual gain, and the buyer withholds 3 percent of the recognized gain instead of 3 percent of the full price.³ This helps when a property appreciated only modestly between purchase and sale.

If Withholding Happens Anyway

If no exemption or deemed-resident status fits, the buyer withholds and remits the tax using Form G-2RP.⁵ You are not out of pocket permanently. The amount shown on the G-2RP is a prepayment of your Georgia tax, and you claim credit for it on your Georgia nonresident income tax return. Report the sale and any gain, then apply the withheld amount against your liability. If the withholding exceeds what you actually owe Georgia for the year, you receive the difference as a refund.

1
Georgia Department of Revenue. IT-AFF3 Seller’s Certificate of Exemption
2
Justia. Georgia Code 48-7-128 – Withholding Tax on Sale or Transfer of Real Property and Associated Tangible Personal Property by Nonresidents
3
Legal Information Institute. Ga Comp R and Regs R 560-7-8-.35 – Withholding on Sales or Transfers of Real Property and Associated Tangible Property by Nonresidents of Georgia
4
Georgia Department of Revenue. IT-AFF1 Affidavit of Sellers Residence
5
Georgia Department of Revenue. G2-RP