Hot Topics
- Senate Bill 1827 - Registered Domestic Partners: SB 1827 (Stats. 2006, Ch. 802) This new law requires registered domestic partners (RDPs) to use the same filing status as married couples when filing their California income tax returns. The law is effective for tax years beginning on or after January 1, 2007.
Beginning January 1, 2007, RDPs who sell or transfer jointly owned California real property that will be reported on their 2007 or later tax return shall be treated as spouses for purposes of completing Form 593, Real Estate Withholding Tax Statement. Therefore, real estate escrow persons may complete and provide RDPs with a combined Form 593 (593-B for tax year 2007) listing both partners for the completed real estate transaction.
For more information regarding this law, see Registered Domestic Partner.
- Results of Real Estate Withholding (AB 2962) (Stats. 2006, Ch. 428) Interested Parties Meeting, December 11, 2006 - See agenda and meeting notes (posted 01/04/07).
- Automatic Calculating Form 593-E - Real Estate Withholding - Computation of Estimated Gain or Loss.
- Assembly Bill 2962 (Stats. 2006, Ch. 428) - amends California Revenue and Taxation Code Sections 18662 and 18668 making changes to real estate transactions closing on or after January
1, 2007.
For details, see the AB 2962 Comparison Chart and Information for Buyers and Sellers.
Withholding Rates
California law requires withholding of 3 1/3 percent of the total sale price, unless an election is made to withhold on the gain on sale, where you would apply the following rates:
- 9.3 percent for individuals
- 8.84 percent for corporations
- 10.84 percent for banks and financial corporations
- 1.5 percent for S corporations
- 3.5 percent for financial S corporations
Certain sellers may be exempt from withholding. The information below may help you understand California's withholding requirements.
Publications and reference material regarding Real Estate Withholding
- Publication 1016, Real Estate Withholding Guidelines
- Publication 677, California Real Estate Withholding Information for Sellers and Buyers (For Sales Closing in 2008)
- Publication 677A, Changes to California Real Estate Withholding Law for 2007 - AB 2962
- FTB 7429, Do I Need To Withhold On This Trust?
- Publication 7429LLC, Real Estate Withholding for Sales by Limited Liability Companies (LLCs)
- Frequently Asked Questions
Forms related to withholding on California Real Estate Sales
We combined Forms 593 and 593-B for escrows closing in 2008, to make one easy to use tax form.
- Form 593, Real Estate Withholding Remittance Statement
- Forms 593-C and 593-E with instructions, Real Estate Withholding Certificate and Computation of Estimated Gain or Loss
- Form 593-I, Real Estate Withholding Installment Sale Agreement
New requirement for withholding agents – You may now file electronically to submit your withholding data.
Email: WSCS.GEN@ftb.ca.gov, if you have questions or comments.
Subject: Real Estate Team