Real estate installment sales

With installment sales, you or the real estate escrow person (REEP) may report the sale or transfer as an installment sale if there will be at least one payment made after the tax year of the sale.


  • You bought property in February 2020
  • Your REEP reports the installment sale to us
  • Any payments made after December 31, 2020 are considered installment payments

Withholding requirements

The withholding on the sale is 3 1/3% (.0333) of the down payment during escrow.

Buyers/transferees are required to:

  • Withhold on the principal portion of all payments made after the close of the real estate transaction
    • Unless we receive an approval letter for elect-out method

We do not require withholding:

Calculate installment payment withholding

You can calculate the withholding amount with either the Total Sales Price Method or the Alternative Withholding Calculation certified.

Visit Form 593 Instructions for more information on calculating the installment payment.

Buyer information

Generally, the real estate escrow person (REEP) will complete the tasks below; though you may need to complete these tasks if you do not have a REEP.

During escrow

After escrow

Continue to withhold on remaining installment payments. For each payment you must:

If you’re sending your final payment, write “Final Installment Payment” on the bottom of Form 593.

Write to us if the following items change:

  • Installment sale or promissory note terms
  • Your payment schedule
Witholding Services and Compliance MS F182
Franchise Tax Board
Po Box 942867
Sacramento CA 94267-0651