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Guide

Seller Tax Withholding in California, Explained

By Karla I. Vasquez, REALTOR® · Keller Williams Realty Danville · Reviewed October 2026

Quick answer

When you sell California real estate, escrow generally withholds 3⅓% of the total sales price and sends it to the Franchise Tax Board (FTB), unless an exemption applies. You can also elect an alternative calculation based on your estimated gain. Common exemptions include selling your principal residence and sales of $100,000 or less. Withholding is a prepayment of income tax, not an extra tax. You claim it when you file your California return.

What is California real estate withholding?

The FTB calls it "a prepayment of income (or franchise) tax" on the gain from selling California real property. It covers homes, buildings and land. Since 2020, one form, Form 593 (Real Estate Withholding Statement), is used for every sale, including sales where withholding doesn't apply.

  • Who withholds: the real estate escrow person, usually your escrow or title company.
  • When it's sent: by the 20th day of the month after escrow closes. You get a copy of Form 593.

How much is withheld?

You have two options.

1. Standard rate: 3⅓% of the total sales price, times your ownership share. Example: on a $900,000 sale, standard withholding would be about $30,000.

2. Alternative calculation: withholding based on your estimated gain times the applicable rate. For individuals, that's 12.3% under the 2026 Form 593 instructions. If your gain is small, this can mean much less withheld. You complete and sign the alternative calculation sections of Form 593.

Do I have to pay California withholding when I sell my house?

Not if you qualify for an exemption. The 2026 Form 593 instructions list exemptions that include:

  • Principal residence. The property was your main home under IRC Section 121 (generally owned and lived in for two of the last five years), or it was last used as your principal residence. Second homes and vacation homes generally don't qualify.
  • Sales price of $100,000 or less
  • Loss or zero gain on the sale
  • Involuntary conversion, such as a home destroyed or condemned, under certain conditions
  • Like-kind (1031) exchange. This can be a full or partial exemption, and cash you receive may still be subject to withholding.
  • Certain entities, such as tax-exempt organizations, and some corporations and partnerships that meet specific conditions
  • Property in foreclosure, and certain sales by a bank acting as trustee

You certify exemptions on Form 593 under penalty of perjury, so review them carefully with your tax professional.

How do I get the withheld money back?

You can't get it back early. After closing, the withholding can only be claimed as a credit on your California tax return:

  • Report the sale on your return for that year.
  • Enter the Form 593 withholding amount and attach a copy of the form.
  • If the amount withheld is more than the tax you owe, the FTB refunds the difference after processing your return.

What about federal taxes and foreign sellers?

  • Capital gains exclusion. The IRS lets you exclude up to $250,000 of gain ($500,000 for married couples filing jointly) on your main home if you meet the ownership and use tests.
  • FIRPTA. If the seller is a foreign person, federal withholding generally applies at 15% of the amount realized. Exceptions and reduced rates exist when the buyer will live in the home and the price is within certain limits. This is separate from California withholding, and California's rules apply to nonresident sellers too.

Karla's tips

  • Talk to your tax professional before you list. Knowing whether you're exempt, or whether the alternative calculation helps, makes your net proceeds estimate accurate.
  • Plan for rentals and inherited homes. These often don't qualify for the principal residence exemption. I help a lot of families with trust and probate sales, and I'll make sure your escrow officer and tax advisor are part of the conversation early.
  • Invest in repairs with a clear view of your net. If withholding will reduce the cash you get at closing, I can help you prioritize repairs using real estimates from my KCK Construction & Remodeling experience.
  • Keep your Form 593. Escrow sends you a copy. Save it with your tax papers.
  • Bilingual help. I'm happy to walk your family through the escrow forms in Spanish so nothing gets signed without being understood.

En español: lo básico

Cuando vende una propiedad en California, escrow normalmente retiene el 3⅓% del precio de venta para la Junta de Impuestos de California (FTB), a menos que aplique una exención. Las exenciones incluyen vender su residencia principal o vender por $100,000 o menos. No es un impuesto adicional: es un pago adelantado que usted reclama en su declaración de impuestos de California. Consulte a su profesional de impuestos y, con gusto, le explico los formularios de escrow en español.

Sources

General information only, not legal, tax or financial advice. Programs, fees and rules change; confirm with the agency, your lender, escrow officer, tax professional or attorney. Karla I. Vasquez is a REALTOR® and Registered LDA, not an attorney.