89-386: Affidavit for Withholding Income Tax on Sale of Real Estate by Non-Resident (2025)
Mississippi · Mississippi DOR · Used for tax years 2025
Mississippi Form 89-386 is a sworn affidavit for income tax withholding on a nonresident's sale of real estate. It reports the seller, buyer, property, sales price, gain, net proceeds and required withholding, with schedules to calculate the gain and net proceeds.
Who files this form
Form 89-386 is an affidavit for withholding Mississippi income tax on a sale of real estate by a non-resident. The seller swears to the facts in the affidavit under penalty of perjury and states that they will file all state income tax returns due.
What you'll need
Have the following information ready:
- Seller’s and buyer’s names and addresses.
- Property description, location and tax map parcel number.
- Closing date and total sales price.
- Selling expenses, including attorney fees, real estate commission, termite and heating and air letter fees, and any other listed expenses.
- Tax basis of the property for Schedule A.
- Mortgage, lien and credit line advance amounts for Schedule B, subject to the form’s deduction limits.
- Seller’s Social Security number and the spouse’s Social Security number or ID number, along with the seller and spouse signature information requested on the form.
For a mortgage, lien or credit line advance made less than one year before closing, the buyer must obtain a seller’s affidavit before deducting it. That affidavit must state that the loan or advance was not made in contemplation of the sale and must meet the requirements and include all information contained in this affidavit.
How to file
- Enter the seller, buyer, property and closing information on page 1.
- Complete Schedule A on page 2 to calculate the gain. Transfer Schedule A, line 5, to page 1, line 5.
- Complete Schedule B to calculate net proceeds. Transfer Schedule B, line 5, to page 1, line 7.
- Multiply page 1, line 5, by 5% and enter the result on line 6. On line 8, enter the smaller of line 6 or line 7 as the required withholding amount.
- Complete the signature fields and the notary acknowledgment.
Mail to:
MS Department of Revenue
P.O. Box 23050
Jackson, MS 39225-3050
Common mistakes
- Deducting debt on another property. Only mortgages and liens on the property being sold may be deducted from the sales price.
- Deducting debt made in contemplation of the sale. The form restricts deductions for mortgages, liens and credit line advances made in contemplation of the sale. The buyer may presume that those made more than one year before closing were not made in contemplation of the sale.
- Deducting recent debt without the required affidavit. For debt or a credit line advance made less than one year before closing, the buyer cannot deduct it without obtaining the seller’s affidavit described on the form.
Questions people ask
How is the withholding amount calculated?
Multiply the gain on page 1, line 5, by 5%. The required withholding on line 8 is the smaller of that tax amount on line 6 or the net proceeds on line 7.
How does Schedule A calculate the gain?
Subtract selling expenses from the total sales price to get the net sales price. Then subtract the tax basis. Enter the resulting gain on Schedule A, line 5, and page 1, line 5.
How does Schedule B calculate net proceeds?
Subtract selling expenses from the total sales price. Then subtract the mortgages, liens or credit line advances allowed under the form’s rules. Enter the result on Schedule B, line 5, and page 1, line 7.
Does the affidavit include a notary acknowledgment?
Yes. It includes an acknowledgment that the seller personally appeared before the notary and acknowledged signing and delivering the affidavit. It also has fields for the notary’s signature, seal and commission expiration.
Does the seller still agree to file state income tax returns?
Yes. Item 9 states that the seller will file all state income tax returns due.