West Virginia
Reviewed October 2026Federal §453 conformity
Yes — West Virginia starts from the federal return and taxes installment gain as payments arrive, at rates that have been falling since the 2023 cuts began: the top rate is 4.58% for 2026, set by the legislature this spring, and from 2027 it can fall further only if an annual revenue test is met. No capital gains preference applies; multi-year projections should carry the rate as a variable that can decline, 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, at fixed percentages: 2.5% of the net proceeds actually paid to the seller, or — as an alternative — 6.5% of the seller's estimated gain, remitted within 30 days and generally collected before the deed is recorded. The statute says nothing specific about installment sales; because the 2.5% base is money actually paid, a seller-financed closing may see withholding measured by the cash at closing, but how later payments are handled should be confirmed with the Tax Division before closing. A certificate from the Tax Commissioner can reduce or eliminate the withholding where the actual tax will be lower.
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 trigger-based cuts possible from 2027, 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, settle the withholding measure (2.5% of proceeds paid or 6.5% of estimated gain) and the handling of later installments with the Tax Division before closing, and consider a Tax Commissioner certificate where the actual tax will be lower; carry the rate as a variable that can fall under the trigger from 2027; and re-check the PTE election annually against any triggered cut.
West Virginia withholds 2.5% of the net proceeds actually paid to a nonresident real estate seller, or alternatively 6.5% of the estimated gain, remitted within 30 days. The statute has no installment-sale rule, so how later payments are treated has to be confirmed with the Tax Division — and a Tax Commissioner certificate can reduce the withholding where the actual tax will be lower. Put the gain documentation and the certificate request on the pre-closing checklist.
Educational information, current as of the October 2026 review. State law changes; confirm treatment with a qualified advisor before structuring a transaction.
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