The standard Withholding Amount is 3.33% of the Sale Price. This article is presented to address the important parts of the law and delineate the certain exemptions that can be used to satisfy the regulation. Be sure you choose the version for the current year. A copy of the 2020 version of this form can be accessed at this link. The law did not change, but the forms changed in 2020, combining the original 4 different forms (593C, 593E, 593I, 593) into one 593 Real Estate Withholding Statement. This article is presented to delineate the certain exemptions that can be used to bypass the regulation. citizens, permanent residents with green card, foreigners, individuals who live out-of-state, or individuals who live in the State. The withholding applies to all Sellers, whether they are U.S. The amount is considered a “prepayment” of income taxes on the potential gain. The amount is withheld by the Settlement Agent from the Seller’s account at the closing of the transaction and sent to the Franchise Tax Board (FTB). An Alternative Calculated Amount can also be used. The State regulations regarding withholdings on real property sales is a little different from the Federal withholding of foreigners under the FIRPTA guidelines.įor the State, the law is written such that all real property being sold requires the payment of tax at the close of escrow in an amount equal to 3.33% of the Sales Price. This article is written as an educational tool for other Escrow Officers (Settlement Agents) and for Real Estate Agents, but as an Investor, it is definitely to your advantage to see what you need to know when you are going to sell that property located in California. Knowing about the laws and planning in advance will save you much time, effort and headaches when the time comes. There are no restrictions for you to buy, but when it comes time to sell, you will need to plan in advance because the State of California has some laws that may apply to you, whether you are a foreigner, an individual living out-of-state, or an individual investor. Under the Revenue and Taxation Code Section 18662)Īre you an individual who is looking to sell a property in California? (State of California Real Estate Withholding Updated January, 2020 to reflect new Franchise Tax Board form
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