Real Estate Withholding When a Trust is on TitleNovember 2021 Tax News
California law requires withholding when California real estate is sold or transferred unless a full or partial exemption applies.
It is important for the seller to report the correct name and identification number on the Real Estate Withholding Statement (Form 593) when title is held in the name of a trust. This ensures the withholding credit is applied correctly and is available when the seller files their California income tax return. This also helps Franchise Tax Board process the form efficiently.
If the seller is a grantor trust, which is also known as a living trust or family trust, then the individual name and social security number (SSN)/Individual Taxpayer Identification Number (ITIN) of the grantor should be entered as the seller in Part II of the Form 593. The name of the grantor trust or trustee information should not be included. The grantor trust is disregarded for federal and California income tax purposes and the individual seller/transferor must report the sale and claim the withholding on the grantor's individual California income tax return. If the trust was a grantor trust that became irrevocable upon the grantor’s death, enter the name of the trust and the trust’s Federal Employer Identification Number (FEIN).
When the seller is a non-grantor trust, the name of the trust and trust’s FEIN should be included on the Form 593. If the non-grantor trust has not applied for a FEIN, leave the identification number blank. Trustee information should not be included. When the non-grantor trust receives their FEIN, they should contact Withholding Services and Compliance at 888-792-4900 or 916-845-4900 to provide the trust's FEIN. The non-grantor trust will report the income and claim the withholding on the trust’s California income tax return.
For more information, please visit Real estate withholding.