Real Estate Withholding Tax

Caifornia Law requires the buyers to withold on the sale or transfer of real estate property. Check out the website for California Department of Real Estate for more information.

Filing requirement - You must file a California tax return to report your real estate sale and to claim real estate withholding:

• Resident individual—Form 540 Booklet
• Nonresident and part-year resident individual—Form 540NR Booklet
• Corporation—Form 100 Booklet
• S Corporation—Form 100S Booklet
• Fiduciary—Form 541 Booklet
• Partnership—Form 565 Booklet
• Limited liability company—Form 568 Booklet

California law requires withholding of 3 1/3 percent (.0333) of the total sale price. Alternatively, you may elect to withhold on the gain on sale and apply the following rates:

• 9.3 percent for individuals and non-California partnerships
• 8.84 percent for corporations
• 10.84 percent for banks and financial corporations
• 10.8 percent for S corporations
• 12.8 percent for financial S corporations

For more information, refer to the Form 593-C and 593-E Booklet, Real Estate Withholding Certificate and Computation of Estimated Gain or Loss.

Certain sellers may be exempt from withholding. The forms and publications below will help you understand California's withholding requirements.