California Real Estate Foreclosures and Short Sale Transactions

Withholding is required for real estate foreclosures and short sale transactions unless any exemptions certified on Form 593-C apply or the sale qualifies for one of the following automatic exclusions:

• The total sale price is $100,000 or less.
• The seller is a bank acting as a trustee, other than a trustee of a deed of trust.
• The buyer is acquiring the property as part of a foreclosure.

In the case of a foreclosure, the buyer must be acquiring the property under one of the following conditions for the seller to be excluded from withholding:

• A power of sale required under a mortgage or deed of trust.
• A decree requiring foreclosure.
• A deed in lieu of foreclosure.

For more information on real estate foreclosures and short sale transactions, refer to Publication 1016, Real Estate Withholding Guidelines.

Withholding Rates

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

• 9.55 percent for individuals and non-California partnerships (effective 01/01/09)
• 8.84 percent for corporations
• 10.84 percent for banks and financial corporations
• 11.05 percent for S corporations (effective 01/01/09)
• 13.05 percent for financial S corporations (effective 01/01/09)

   Chinese Farsi Filipino Japanese Korean Portuguese Russian Spanish Vietnamese

email Rick Chehab, Broker or Call 408/981-1565       

Homepage| Residential| Commercial| Property Management| Business Advisory Services|