California Withholding (Form 593) on a Home Sale: Questions for Escrow

Form 593 is the Franchise Tax Board's Real Estate Withholding Statement. California law requires the buyer to withhold part of the sale price of California real property and send it to the Franchise Tax Board unless the sale is $100,000 or less or the seller certifies an exemption on Form 593 before closing; in practice escrow does the paperwork. The withholding is a prepayment credited against the seller's California income tax, not an extra tax, and it applies to sellers wherever they live. Which exemption, if any, fits your sale is a question for a tax professional; how the form moves through your escrow is a question for the escrow officer.

This page is part of the Out-of-State and Absentee Owners section and belongs to the paperwork step of selling a Southern California house from out of state. It describes the rule from the Franchise Tax Board's own guidance and the statute. It does not tell you whether you qualify.

What Form 593 is, and who fills in what

The statute behind it is Revenue and Taxation Code section 18662. It puts the duty to withhold on the buyer (the "transferee"), and the Franchise Tax Board's Publication 1016 says the withholding may be performed by the real estate escrow person on the buyer's behalf. Whoever sends the payment completes the remitter parts of Form 593.

The seller's part is the certification. As the seller you complete and sign Form 593 under penalty of perjury, identifying a full exemption or a partial one, and give it to the buyer or escrow before the close of the transaction. Publication 1016 is direct about the consequence: if the signed form identifying your exemption is not received before close, withholding is required.

Does it only apply to sellers who live outside California?

No, and this is the most common misunderstanding among absentee owners. The rule is written around the property, not the seller's address. Publication 1016 lists who is subject to withholding unless an exemption applies (individuals, trusts, estates, LLCs and others), and it states that foreign sellers follow the same rules as domestic sellers. A seller who lives in Arizona and one who lives down the street from the house start from the same rule. What can differ is which exemption, if any, their facts support.

How much is withheld, and when none is

Section 18662 sets the standard amount at 3 1/3 percent of the sales price. Publication 1016 calls this the Total Sales Price Method, "3 1/3% (.0333)" of the total sales price. The seller may instead elect the Alternative Withholding Calculation Method, which applies the seller's maximum tax rate to the estimated gain worked out on Form 593; the seller certifies that gain under penalty of perjury. The Franchise Tax Board also says escrow is not authorized to give legal or accounting advice on the amount and encourages sellers to consult a tax professional.

No withholding is required when:

• the total sales price is $100,000 or less (for several sellers, the total price counts, not each share);
• the property is sold through a foreclosure, a power of sale or a deed in lieu of foreclosure;
• the seller certifies an exemption on Form 593.

The exemptions sellers ask about

Each of these is a certification you sign, so each is a question for a tax professional before you sign it. They are listed here so you know what to ask about, not to suggest you fit one.

• Principal residence. Publication 1016 describes ownership and use as a principal residence for two of the five years before the sale, with exceptions for some sales caused by a job change, health or unforeseen circumstances. It also says rental property, vacant land, vacation homes and second homes generally do not qualify, though a property that was rented may still qualify if it meets the criteria.
• Last used as your principal residence. The statute and Publication 1016 both describe an exemption, for withholding purposes only, when the property's last use was as the seller's principal residence. This is the one owners who moved away and left the house empty most often ask about.
• Loss or zero gain. The seller calculates it on Form 593. Publication 1016 notes that a short sale does not qualify simply because the seller receives no cash.
• Like-kind exchange or involuntary conversion. Both have their own conditions under the Internal Revenue Code sections the publication names.

Trusts, estates and LLCs

Many absentee owners sell as a trustee or for an estate, and the form follows the taxpayer, not the name on the deed.

• Revocable or living trusts. Publication 1016 says family and living trusts are generally grantor trusts, and withholding forms use the grantor's information. Escrow will also ask for trust documents for other reasons; see certification of trust: what escrow asks the trustee for.
• Estates. Publication 1016 states there is no exemption for an estate just because the decedent was a California resident, but a sale of the decedent's principal residence can be certified as exempt.
• Single-member LLCs. If the LLC is disregarded for federal tax purposes, the member is treated as the seller.

Inherited houses raise a second tax question, basis, which is separate from withholding; see step-up in basis questions for a tax professional.

Timing for a seller who is not in California

• Ask for the form when escrow opens. Section 18662 does not require the buyer to withhold unless the escrow person has given written notice of the requirement, so escrow normally raises it early. Ask for the seller's copy at the start rather than in the closing package.
• Have a taxpayer identification number ready. Publication 1016 says a seller needs a valid TIN to claim an exemption.
• Sign before close. An unsigned or late form means withholding comes out of your proceeds.
• Keep the copy you receive after closing. Publication 1016 says the remitter sends the payment and a copy of Form 593 to the Franchise Tax Board, and a copy to the seller, by the 20th day of the month after the month escrow closes.

Getting credit for the amount withheld

Withholding is not the final tax. Publication 1016 says a seller who meets California filing requirements files a California income tax return to report the sale and claim the amount withheld. If the withholding is more than the tax owed, the Franchise Tax Board refunds the difference after the return is processed; California does not give early refunds of real estate withholding. If it is less, more tax may be due. The publication points sellers to MyFTB to confirm the credit was applied.

Questions to ask escrow

• When will you send me Form 593, and how do you want it returned from another state?
• Who is the remitter on this sale, the buyer or escrow?
• Will a withholding line appear on my estimated settlement statement, and at what amount if no exemption is certified?
• For a trust, an estate or an LLC, whose name and TIN go on the form?
• When will I receive my copy after closing?

Questions to take to a tax professional

• Does my use of the house support the principal-residence or last-use exemption?
• Would the alternative calculation, based on estimated gain, make sense for me?
• Do I need to file a California return for the year of the sale, and what else changes because I live in another state?
• If the house was inherited or held in a trust, how is my basis figured?

Where it shows up on the net

Withholding is a line on the settlement statement, so it reduces the cash wired to you at closing even though it is credited later. It applies the same way whether the house is listed or sold for cash, so it is not a reason to pick one route over the other.

LineAs-is cash offerOpen-market read

Sale price

-

-

Less: loan payoff and liens

-

-

Less: selling costs and transfer tax

-

-

Less: California withholding, if no exemption is certified

-

-

Cash at closing

-

-

When the open-market column nets more and you have the time and local help to list, the written recommendation says so. A higher price also means a higher withholding amount under the total-price method, which is one more reason to ask your tax professional about it before you compare.

What this looks like in practice

These are the kinds of files that come in, described without names or figures.

• A daughter in Oregon selling her late father's house in La Verne through his estate, who assumed withholding only applied to her as a nonresident. The question for her tax professional was the decedent's principal residence.
• A landlord in Texas selling a tenant-occupied house in Chino that was never his residence. He asked a tax professional about the alternative calculation before escrow opened, not the week of closing.

Withholding is one item on the list of California paperwork; signing is the next. See remote online notarization vs. mobile notary and the remote sale workflow, start to finish.

Next step

If you own a Southern California house from another state, start with the out-of-state owner page or call (909) 498-3977. The two numbers come with a net that shows where escrow's withholding line would sit, so you know what to ask before you sign. There is no cost and no obligation to get the two numbers and the written report.

Sources

• Franchise Tax Board, Publication 1016, Real Estate Withholding Guidelines (revised 02/2026): ftb.ca.gov, accessed November 6, 2026
• California Revenue and Taxation Code 18662, subdivision (e) (real property withholding, the $100,000 threshold, the exemption certificate, the escrow notice), text read on California Public Law: california.public.law, accessed November 6, 2026

Mr. Cali Offers is not a tax adviser or an escrow company. Cash offers come from independent buyers and investors who buy for their own account and may resell for profit; a cash offer is generally below what the open market would bring. Any value shown is a preliminary estimate, not an appraisal. Nothing here is legal, tax or financial advice.