The Notice and Disclosure to Buyer of State Tax Withholding on Disposition of California Real Property is similar in concept to the federal Foreign Investment in Real Property Tax Act. Its purpose is to insure that, in certain California real estate transactions, income tax is collected upon the sale of property and turned over to the State Franchise Tax Board. Since the transactions to which this requirement applies involve out of state sellers, the burden to collect the tax is put on the buyer.
The Notice and Disclosure to Buyer of State Tax Withholding on Disposition of California Real Property is to be delivered to the buyer by escrow. If a buyer does not withhold and deliver the required 3 1/3% of the total sales price as state income tax to the State Franchise Tax Board, the buyer may be subject to penalties. In addition, if the escrow company fails to properly notify the buyer of his obligation to collect the tax, penalties may also be levied against the escrow company.
The following are California real estate transactions to which this law applies:
The seller shows an out of state address or the sale proceeds are to be di*****ursed to a financial intermediary of the seller
The sales price exceeds $100,000
The seller does NOT certify the he or she is a resident of California or that the property being conveyed is his or her personal residence.
Statutory Authority: Revenue and Taxation Code Sections 18805, 18815 and 26131.
The Notice and Disclosure to Buyer of State Tax Withholding on Disposition of California Real Property is to be delivered to the buyer by escrow. If a buyer does not withhold and deliver the required 3 1/3% of the total sales price as state income tax to the State Franchise Tax Board, the buyer may be subject to penalties. In addition, if the escrow company fails to properly notify the buyer of his obligation to collect the tax, penalties may also be levied against the escrow company.
The following are California real estate transactions to which this law applies:
The seller shows an out of state address or the sale proceeds are to be di*****ursed to a financial intermediary of the seller
The sales price exceeds $100,000
The seller does NOT certify the he or she is a resident of California or that the property being conveyed is his or her personal residence.
Statutory Authority: Revenue and Taxation Code Sections 18805, 18815 and 26131.
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