CA Form 593 Instructions: Exemptions, Withholding, and Filing

California Form 593, the Real Estate Withholding Statement, is the document the Franchise Tax Board uses to collect a prepayment of state income tax from the seller whenever California real property changes hands for more than $100,000. These California Form 593 instructions walk through who fills it out, which boxes to check, how much to withhold, when to file, and how to claim the money back on your return. In most sales the escrow or title company does the paperwork, but the seller still has to understand the exemptions and sign the perjury statement before escrow closes.¹

When Form 593 Is Required

Under California Revenue and Taxation Code Section 18662, withholding applies to any transfer of California real property with a sales price above $100,000. Real property includes land, buildings, easements, and interests in property held by someone else. Exchanges under IRC Section 1031 count as transfers too, with their own exemption rules.¹

Withholding is not required when any of the following apply:²

The sales price is $100,000 or less.
The property is being transferred through foreclosure.
The seller is a bank acting as a trustee (other than under a deed of trust).
The seller certifies to a full exemption on Part III of the form.

The default withholding rate is 3⅓% of the total sales price. A seller who qualifies for an exemption or whose actual gain is small can reduce or eliminate that amount, but the burden is on the seller to claim it on the form before closing.

Who Actually Prepares the Form

The buyer is technically responsible for making sure withholding happens, but in practice the Real Estate Escrow Person (REEP) — the title or escrow company handling the closing — prepares Form 593, collects the withholding from the seller’s proceeds, and remits it to the FTB. The REEP is required to notify the buyer of the withholding obligation in writing.¹

The seller’s job is to review the exemption certifications, decide whether to elect the alternative calculation, provide a tax identification number, and sign Side 3 under penalty of perjury. If the seller refuses to provide a TIN, the REEP still has to withhold.

What to Gather Before You Start

Have the following ready:

Full legal name and current mailing address for each seller, buyer, and the remitter.
Tax identification numbers. Individuals use an SSN or ITIN; entities use a FEIN, California Corporation number, or Secretary of State file number. If a number has been applied for but not received, write “Applied For” and attach a copy of the federal application.¹
Transfer date (typically the date escrow closes).
Total sales price.
Adjusted basis records if you plan to claim a loss exemption or use the alternative calculation. Keep purchase documents, improvement receipts, and depreciation schedules for at least five years.

Completing Form 593 Part by Part

The 2026 version of Form 593 has seven parts across three sides. The seller must sign and date the perjury statement on Side 3 before escrow closes, or any exemption or reduced calculation claimed on the form is invalid. The buyer does not sign on a traditional (non-installment) sale.

Part I — Remitter Information

The remitter sends the withholding to the FTB. In a standard sale that is the escrow or title company. Enter the remitter’s business name, identification number, and address. If the remitter is an entity, use the business FEIN or California identification number, not an employee’s personal information.

Part II — Seller/Transferor Information

Enter the seller’s name, mailing address, and identification number. Use either a business name or an individual name, not both. For a nongrantor trust, enter the trust’s name and its own FEIN rather than the trustee’s personal details.²

Part III — Full Exemptions

Part III lists nine certifications that fully exempt the sale. Check every box that applies. The most commonly used are:¹

Line 1 — Principal residence. You owned and lived in the property as your main home for at least two of the five years before the sale. IRC Section 121 lets you exclude up to $250,000 of gain ($500,000 if married filing jointly) from income. Exceptions to the two-year rule exist for job relocation, health reasons, or unforeseen circumstances such as divorce or job loss.³
Line 2 — Last used as principal residence. Even if you moved out, the exemption applies when the most recent use was as your main home. A vacation home or rental you previously lived in does not qualify.
Line 3 — Loss or zero gain. Your sale proceeds must be less than or equal to your adjusted basis. You have to complete Part VI and show a loss or zero gain on line 28. Feeling like you sold for less than the property is worth is not enough; the math has to support it.
Line 4 — Involuntary conversion. The property was taken through condemnation or eminent domain, or destroyed by disaster, and you plan to replace it.

If only a portion of the property qualifies as your principal residence (for example, you lived in one unit of a duplex and rented the other), prepare a second Form 593 for the non-qualifying portion.

Part IV — Other Exemptions

Use Part IV only if no full exemption in Part III applies. It covers partial or deferred-tax situations such as a like-kind exchange (Line 10) or an installment sale (Line 11). If nothing in Part III or Part IV applies, check Line 12 to indicate that withholding is required at the standard rate.

Part V — Buyer/Transferee Information

Enter the buyer’s name and identification number. For installment sales, Part V also records the terms of the promissory note and the buyer’s acknowledgment that they will withhold on future principal payments.

Part VI — Computation

Part VI is the gain or loss worksheet. Complete it if you are claiming the loss exemption or electing the alternative withholding calculation. The computed gain or loss lands on line 28.

Part VII — Withholding Amount

Part VII is where the final number goes. Either 3⅓% of the sales price or the alternative calculation amount from Part VI, whichever the seller elected, ends up on line 37.

Choosing Between Standard and Alternative Withholding

The default 3⅓% of the sales price can far exceed the actual tax owed, especially when the gain is small relative to the price. The Alternative Withholding Calculation Election in Part VII lets you base withholding on estimated gain instead.

Complete Part VI to compute your gain on line 28, then multiply that gain by the rate for your filing type:

Individual — 12.3%
Corporation — 8.84%
S Corporation — 13.8%

Put the result on line 29 and compare it to 3⅓% of the sales price on line 30. If the alternative amount is lower, check the appropriate box in Part VII and use that smaller amount on line 37. This election is particularly valuable for sellers who have owned a property for decades and have a high sales price but a proportionally modest taxable gain.¹

Installment Sales

When the buyer pays over time, the withholding rules change midstream. During escrow, the REEP withholds 3⅓% of the down payment and submits it with Form 593-V. After escrow closes, the buyer takes over the withholding duty.⁴

On each installment payment the buyer withholds on the principal portion only; interest is not withheld on. The withholding uses either the sales price method or the alternative calculation certified on the original Form 593. Each payment’s withholding is due to the FTB by the 20th of the month following the payment, submitted with its own Form 593 and Form 593-V. Write “Final Installment Payment” at the bottom of Form 593 when sending the last one.

1031 Like-Kind Exchanges

A sale that is part of a tax-deferred exchange under IRC Section 1031 is exempt from withholding at the initial transfer. The seller certifies this on Line 10 of Part IV. Both simultaneous and deferred exchanges qualify. Two situations still trigger withholding:

If the seller receives cash or non-like-kind property (“boot”) worth more than $1,500, the REEP or Qualified Intermediary withholds on that boot.
If the exchange fails or does not qualify for nonrecognition treatment, the intermediary withholds 3⅓% of the full sales price.

Sellers who complete a 1031 exchange also file Form FTB 3840, California Like-Kind Exchanges, as an annual information return.¹

Filing Deadline and Payment

Form 593 and the withholding payment are due by the 20th day of the calendar month after the month escrow closed. A sale that closes on March 10 is due by April 20.

The remitter submits the original Form 593 with Form 593-V (the Payment Voucher for Real Estate Withholding) and the withholding payment. Payment can go by check with the voucher or electronically through the FTB’s Web Pay system. Form 593 itself can also be filed electronically through the FTB’s Secure Web Internet File Transfer (SWIFT) system; even with electronic filing, the remitter still mails Form 593-V with the payment.¹

The remitter must give the seller a copy of Form 593 by the same deadline. The seller needs that copy to claim the credit. Electronic signatures, including DocuSign, are accepted.

Claiming the Withholding on Your Tax Return

The amount withheld is not lost money. It is a prepayment that gets credited against your California tax when you file for the year of the sale. Report the sale on your return and enter the amount from Form 593 line 37 as withholding on the appropriate form:⁵

Individuals — Form 540 (residents) or Form 540NR (nonresidents and part-year residents)
Trusts and estates — Form 541
Corporations — Form 100 or Form 100S
Partnerships and LLCs — Form 565 or Form 568

Attach a copy of Form 593 to the front of the return. If the withholding is more than your actual tax, you get the difference back as a refund.

Fixing a Mistake After Filing

Only the REEP can file an amended Form 593. The seller cannot file one independently, so if you spot an error after closing, contact the escrow company. To amend:⁵

Complete a new Form 593 using the same taxable year version as the original.
Check the “Amended” box in the upper left corner.
Enter the correct information. Do not use negative numbers.
Attach a letter explaining what was wrong and what changed.
Mail the amended form and letter to the FTB at the address in the form instructions.
Provide a copy to the seller.

An amended form cannot cancel a withholding amount after escrow has closed. Once the money is with the FTB, the only way for the seller to get it back is as a credit on their tax return. If the wrong year’s version of the form was used, call the FTB’s Withholding Services and Compliance line at 888-792-4900.

Penalties and Interest

For taxable years beginning on or after January 1, 2026, the penalty for a late or incorrect Form 593 is calculated per seller:¹

1 to 30 days late — $60
31 days to 6 months late — $130
More than 6 months late — $340

If the FTB finds the failure was intentional, the penalty jumps to the greater of $680 or 10% of the required withholding.

A REEP that fails to notify the buyer about the withholding obligation faces a penalty of the greater of $500 or 10% of the required withholding. The same penalty applies to a buyer who was notified but did not withhold.

A seller who knowingly signs a false exemption certification to avoid withholding faces the steepest consequence: the greater of $1,000 or 20% of the required withholding.

Interest runs on any late withholding payment from the original due date until the FTB receives the money. The rate through June 30, 2026, is 7% per year on underpayments.⁶

1
Franchise Tax Board. 2026 Instructions for Form 593 Real Estate Withholding Statement
2
Franchise Tax Board. Real Estate Withholding
3
Office of the Law Revision Counsel. 26 USC 121 Exclusion of Gain From Sale of Principal Residence
4
Franchise Tax Board. Real Estate Installment Sales
5
Franchise Tax Board. 2024 Instructions for Form 593 Real Estate Withholding Statement
6
Franchise Tax Board. Interest and Estimate Penalty Rates