West Virginia
Reviewed July 2026Federal §453 conformity
Yes — West Virginia starts from the federal return and taxes installment gain as payments arrive, at rates that have been falling steadily since the 2023 cuts began: the top rate sits near 4.6% with automatic trigger reductions continuing as revenue allows. No capital gains preference applies; multi-year projections should carry the rate as a declining variable, not a constant.
Nonresident sourcing
Gain from West Virginia real estate or a business operating here is West Virginia income for sellers anywhere, and the payments keep that character; intangible gain generally follows the seller home.
Withholding
West Virginia withholds when a nonresident sells real estate — and its regime follows the installment structure rather than fighting it: for an installment sale, withholding applies to payments as the seller receives them, computed on the taxable part of each. That spares the seller a year-one cash hit on money not yet received, but it makes the withholding a standing feature of every payment, with paperwork to match.
Selling, then moving (residency change)
West Virginia-source gain stays taxable here after a move; other gain travels with the seller, and no rule accelerates deferred gain at the border.
Pass-through entity (PTE) tax election
West Virginia's PTE election (2022, retroactive) taxes the entity at the individual rate with owner credits, on annual terms. With the rate falling year by year, re-verify the election's parameters each recognition year rather than carrying assumptions forward.
Estate and IRD
West Virginia has no estate or inheritance tax. At death the federal rules apply — heirs pay income tax as payments arrive — with no state layer.
Planning notes
West Virginia's list: for nonresident real estate sellers, build the per-payment withholding into the note documents and file the gain paperwork so it tracks the actual gain; carry the falling rate as a variable in every projection; and re-check the PTE election annually against the moving rate.
West Virginia's nonresident real estate withholding applies to installment payments as received — aligned with the structure, but permanent company for the life of the note. Set up the gain documentation at closing so each payment's withholding tracks the taxable portion, not the gross check.
Educational information, current as of the July 2026 review. State law changes; confirm treatment with a qualified advisor before structuring a transaction.
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