California requires withholding on the sale or transfer of real property located in the state when the seller is a nonresident individual, a nonresident entity, or certain other qualifying sellers. Form 593, Real Estate Withholding Statement (accessed May 25, 2026), is used to report the transaction and to claim an exemption from or a reduced amount of withholding. The standard withholding rate remains 3.333 percent of the sales price for 2026. This publication reflects tax law and regulations applicable as of May 2026 and is subject to change without notice.
This article examines the withholding requirements for California real property sales under Form 593 in 2026, the most common errors in completion and filing, correction procedures, and official FTB resources.
Withholding Requirements Under Form 593 for 2026
Sellers of California real property must generally have 3.333 percent of the sales price withheld unless an exemption is properly claimed on a timely filed Form 593. The buyer (or escrow agent) is the withholding agent responsible for collecting and remitting the tax to the Franchise Tax Board. Exemptions may be claimed when the seller has no taxable gain, qualifies under specific residency or entity rules, or elects withholding based on the actual gain rather than the sales price. The form must be completed and signed by the seller and submitted to the buyer or escrow before the close of escrow.
Common Errors in Completing Form 593
| Common Error | Description | Correction |
|---|---|---|
| Incorrect tax year or form revision | Using a prior-year version or wrong tax year designation | Use only the current 2026 Form 593 and instructions |
| Contradictory exemption boxes checked | Multiple or inconsistent exemption claims selected | Select only one valid exemption category |
| Incomplete seller or buyer information | Missing SSN/EIN, address, or escrow details | Provide all required identifying information for every party |
| Incorrect withholding calculation | Applying the wrong rate or base (sales price vs. gain) | Use 3.333% of sales price unless valid gain-based election is properly documented |
| Missing or improper signatures | Seller or buyer signature absent or not dated | All required signatures and dates must be original or properly authenticated |
Failure to withhold the required amount or to file a correct Form 593 may subject the buyer or escrow agent to penalties equal to the amount that should have been withheld plus interest. Amended Form 593 statements may only be filed by the original remitter (buyer or escrow agent). Taxpayers should retain copies of all documentation, including the sales agreement and escrow closing statement, for at least four years.
Procedures for Correcting Form 593 Errors
When an error is discovered after filing, the buyer or escrow agent must prepare and submit an amended Form 593 clearly marked "AMENDED" at the top. The amended statement must include the correct information and an explanation of the changes. The Franchise Tax Board will adjust the withholding record and, where appropriate, issue a refund or credit to the seller. Sellers who believe withholding was excessive may claim a credit or refund on their California personal income tax return (Form 540) or corporation tax return by attaching a copy of the original and amended Form 593.
Compliance Resources and Tools
Official FTB forms and instructions, including Form 593, Form 593 instructions, and FTB Publication 1017 (all accessed May 25, 2026), are available on the Franchise Tax Board website.
- California requires 3.333 percent withholding on the sale of real property located in the state unless a valid exemption is claimed on Form 593.
- Common errors include incorrect tax year, contradictory exemption claims, incomplete identifying information, and calculation mistakes.
- Only the buyer or escrow agent (remitter) may file an amended Form 593 to correct errors.
- Proper completion and timely submission of Form 593 before escrow closing prevents penalties and delays in refunds.
- Sellers may claim over-withholding on their California income tax return by attaching copies of the Form 593 statements.
- All parties should retain complete documentation for at least four years to support the transaction and any amended filings.
References
- Franchise Tax Board. (2026). Form 593 – Real Estate Withholding Statement. FTB.ca.gov. Accessed May 25, 2026. https://www.ftb.ca.gov/forms/2026/2026-593.pdf.
- Franchise Tax Board. (2026). Instructions for Form 593. FTB.ca.gov. Accessed May 25, 2026. https://www.ftb.ca.gov/forms/2026/2026-593-instructions.pdf.
- Franchise Tax Board. (2026). Publication 1017: Nonresident Withholding – Real Estate Sales. FTB.ca.gov. Accessed May 25, 2026. https://www.ftb.ca.gov/forms/2026/2026-1017.pdf.
- Franchise Tax Board. (2026). Form 593-V – Real Estate Withholding Tax Payment Voucher. FTB.ca.gov. Accessed May 25, 2026. https://www.ftb.ca.gov/forms/2026/2026-593-v.pdf.
- Franchise Tax Board. (2026). California Tax Forms and Instructions for 2026. FTB.ca.gov. Accessed May 25, 2026. https://www.ftb.ca.gov/forms.
The information contained in this publication is provided for educational and general informational purposes only. It does not constitute tax advice, accounting advice, legal advice, or any other form of professional advice and does not create a client-professional relationship.
The content reflects tax law and regulations applicable on the date of publication only and is subject to change without notice. Examples and illustrations are hypothetical and do not represent any specific taxpayer situation.
No reader should act or refrain from acting on the basis of this publication without first obtaining specific written advice from a licensed CPA based on the reader's individual facts and circumstances.
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