California Real Estate Withholding Changes for 2020

Posted by Phil Boren on Sunday, January 26th, 2020 at 12:24pm.

California real estate withholding rules have changed - again. Effective January 1, 2020, every real-estate-sale transaction will trigger the need for a new FTB Form 593 to be filed with the Franchise Tax Board, even if the seller qualifies for one of several exemptions. It's not a new tax, but a new reporting requirement. Whether you are buying or selling a home in California, this change will come into effect with the closing of your escrow. Here's a good summary of all the changes that came into effect with this recent change, from our friends at Fidelity Title - just click the pic below to see the flyer:

California Real Estate Withholding Form 593

In a nutshell, this new form impacts sellers to the extent that they have to fill out a new form, and buyers to the extent that they are actually charged with the responsibility of having taxes withheld for non-qualifying sellers. This requirement has been the case for years, but this is a new form that now has to be filled out and filed on every real-estate sale. It's likely that the FTB felt that they we not collecting taxes that were due on previous sales, so the new form and new requirement were instituted and went into effect earlier this month. Again, this is not a new tax but a new form (Form 593), and a new reporting requirement of the California FTB.

Your escrow officer will be going over this new form with you so you don't have to worry, but it's a new form that you may not be familiar with. If you have any questions, feel free to reach out and we can try to answer them for you or we will put you in touch with a title officer who can give you more details. Bottom line ... just another form.

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Phil Boren
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