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Changes to California Real Estate Withholding Tax Rates

Purpose of bulletin

To inform staff of a decrease in the optional gain on sale withholding tax rates for individuals, non-California partnerships, S corporations, and financial S corporations beginning January 1, 2011.

Background

Effective January 1, 2009, ABX3 3 resulted in an increase to the optional gain on sale withholding tax rates for individuals, non-California partnerships, S corporations, and financial S corporations. The tax rate increase expires on January 1, 2011.

As a result of the expiration, the optional gain on sale of withholding tax rates will decrease as follows:

  • Individuals and non-California partnerships - from 9.55 to 9.3 percent
  • S corporations - from 11.05 to 10.8 percent
  • Financial S corporations - from 13.05 to 12.8 percent

The following forms and instructions have changed to reflect the new tax rates.

  • Form 593, Real Estate Withholding Tax Statement
  • Form 593-I, Real Estate Withholding Installment Sale Acknowledgement
  • Form 593-E, Real Estate Withholding - Computation of Estimated Gain or Loss

The online Form 593-E, Real Estate Withholding - Computation of Estimated Gain or Loss, includes math features that calculate the estimated gain or loss on the sale of California real property, and the optional gain on sale withholding amount. The form also computes the withholding amount based on 3.33 percent of the total sales price for comparison.

Taxpayer inquiries

Taxpayers can go to ftb.ca.gov, and search for real estate withholding or call us at 888.792.4900 or 916.845.4900, Monday through Friday, 8 am to 5 pm, except state holidays.