California Form 593-C - Real Estate Withholding Certificate - 2014 Page 2
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3Instructions for Form 593-C
Real Estate Withholding Certificate
References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2009, and to the California Revenue and Taxation Code (R&TC).
What’s New
name and SSN . For tax purposes, the grantor trust is disregarded for tax
purposes and the individual seller or transferor must report the sale and claim
Like-Kind Exchanges – For taxable years beginning on or after
the withholding on their individual tax return . If the trust was a grantor trust
January 1, 2014, California Revenue & Taxation Code (R&TC) Sections
that became irrevocable upon the grantor’s death, enter the name of the trust
18032 and 24953 require California resident and non-resident taxpayers
and the trust’s federal employer identification number (FEIN) . Do not enter
who defer gain on the sale or exchange of California property for out of state
the decedent’s or trustee’s name or SSN.
replacement property under Internal Revenue Code Section (IRC) 1031 to file
If the seller or transferor is a non-grantor trust, enter the name of the trust
an annual information return with the Franchise Tax Board (FTB) . Taxpayers
and the trust’s FEIN . Do not enter trustee information.
are required to file an information return for the taxable year of the exchange
If the seller or transferor is a single member limited liability company
and in each subsequent taxable year in which the gain or loss attributable to
(SMLLC), enter the name and tax identification number of the single member .
the exchange has not been recognized . If a taxpayer fails to file the required
information return, the FTB can estimate the net income, from any available
Ownership Percentage
information, including the amount of gain deferred, and propose to assess the
Enter your ownership percentage rounded to two decimal places (e .g . 66 .67%) .
amount of tax, interest, and penalties due .
If you are on the title for incidental purposes and you have no financial
ownership, enter 0 .00 and skip to Seller or Transferor Signature . You will not
General Information
be withheld upon .
In general, for taxable years beginning on or after January 1, 2010, California
Examples of sellers or transferors who are on title for incidental purposes are:
law conforms to the IRC as of January 1, 2009 . However, there are continuing
• Co-signers on title (e .g ., parents co-signed to help their child qualify for
differences between California and federal law . When California conforms
the loan) .
to federal tax law changes, we do not always adopt all of the changes made
• Family members on title to receive property upon the owner’s death .
at the federal level . For more information, go to ftb.ca.gov and search
Part II – Certifications That Fully Exempt
for conformity . Additional information can be found in FTB Pub . 1001,
Supplemental Guidelines to California Adjustments, the instructions for
Withholding
California Schedule CA (540 or 540NR), and the Business Entity tax booklets .
Purpose
Line 1 – Principal Residence
To qualify as your principal residence under IRC Section 121, you (or the
Use Form 593-C, Real Estate Withholding Certificate, to determine whether
decedent) generally must have owned and lived in the property as your main
you qualify for a full or partial withholding exemption .
home for at least two years during the five-year period ending on the date
of sale . Military and Foreign Service, get FTB Pub . 1032, Tax Information for
Qualifying for an exemption from withholding or being withheld upon does
Military Personnel .
not relieve you of your obligation to file a California income tax return and pay
any tax due on the sale of California real estate .
You can have only one main home at a time . If you have two homes and live
in both of them, the main home is the one you lived in most of the time .
The seller or transferor must submit this form before the close of escrow to
prevent withholding on the transaction . After escrow has closed, amounts
There are exceptions to the two-year rule if the primary reason you are selling
withheld may be recovered only by claiming the withholding as a credit on the
the home is for a change in the place of employment, health, or unforeseen
appropriate year’s tax return .
circumstances such as death, divorce or termination of registered domestic
partnership, or loss of job, etc . For more information about what qualifies
Specific Instructions
as your principal residence or exceptions to the two-year rule, get federal
Publication 523, Selling Your Home. To get federal publications, go to irs.gov,
Private Mail Box (PMB) – Include the PMB in the address field . Write “PMB”
or call 800 .829 .3676 .
first, then the box number . Example: 111 Main Street PMB 123 .
If only a portion of the property qualifies as your principal residence, a second
Foreign Address – Enter the information in the following order: City, Country,
Form 593-C will need to be completed to certify an exemption on the portion
Province/ Region, and Postal Code . Follow the country’s practice for entering
not used as a principal residence .
the postal code . Do not abbreviate the country’s name .
The allocation method should be the same as the seller or transferor used to
Part I – Seller or Transferor
determine depreciation .
Line 2 – Property last used as your principal residence
Enter the name, tax identification number, and address of the seller or other
If the property was last used as the seller’s, transferor’s, or decedent’s
transferor . If the seller or transferor does not provide a tax identification
principal residence within the meaning of IRC Section 121 without regard
number, then Form 593-C is void, and withholding is required .
to the two-year time period, no withholding is required . If the last use of the
Note: If you choose to provide a copy of Form 593-C to the buyer, delete the
property was as a vacation home, second home, or rental, you do not qualify
seller’s or transferor’s tax identification number on the buyer’s copy .
for the exemption . You must have lived in the property as your main home .
If the seller or transferor is an individual, enter the social security number
If you have two homes and live in both of them, the main home is the one you
(SSN) or individual taxpayer identification number (ITIN) . If the sellers or
lived in most of the time .
transferors are spouses/registered domestic partners (RDPs) and plan to
Line 3 – Loss or Zero Gain
file a joint return, enter the name and SSN or ITIN for each spouse/RDP .
You have a loss or zero gain for California income tax purposes when the
Otherwise, do not enter information for more than one seller or transferor .
amount realized is less than or equal to your adjusted basis . You must
Instead, complete a separate Form 593-C for each seller or transferor .
complete Form 593-E, Real Estate Withholding – Computation of Estimated
If you do not have an SSN because you are a nonresident or a resident alien
Gain or Loss, and have a loss or zero gain on line 16 to certify that the
for federal tax purposes, and the Internal Revenue Service (IRS) issued you
transaction is fully exempt from withholding .
an ITIN, enter the ITIN in the space provided for the SSN .
You may not certify that you have a net loss or zero gain just because you do
An ITIN is a tax processing number issued by the IRS to individuals who have
not receive any proceeds from the sale or because you feel you are selling the
a federal tax filing requirement and do not qualify for an SSN . It is a nine-digit
property for less than what it is worth .
number that always starts with the number 9 .
If the seller or transferor is a grantor trust, enter the grantor’s individual
Page 4 Form 593-C/Form 593-E Booklet 2013
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