How to Fill Out Form 593-B: Exemptions, Computation, and Filing

If you’re looking for Form 593-B, it no longer exists as a standalone document. The Franchise Tax Board consolidated all California real estate withholding certificates into a single Form 593, the Real Estate Withholding Statement, effective January 1, 2020.¹ The exemption certifications that used to appear on 593-B now sit in Part III and Part IV of the current Form 593. To fill it out, you complete the property and seller identification sections, check the box for your exemption (or indicate none applies), run the computation on Part VI if required, sign under penalty of perjury, and hand the signed form to your escrow agent before closing.

What Form 593 Does

California withholds a prepayment of state income tax on real estate sales. The default rate is 3⅓% of the total sales price.² It’s not an additional tax; it’s credited against what you owe when you file your California return. Form 593 is how you either claim an exemption from that withholding or document the amount being withheld. The escrow agent, acting as the Real Estate Escrow Person (REEP), handles the mechanics of remitting funds and filing the form with the FTB. Your job is to deliver a correctly completed, signed Form 593 before escrow closes. If no signed form reaches the REEP in time, the full 3⅓% comes out of your proceeds automatically.

Before You Start

Pull the property’s Assessor’s Parcel Number from your tax bill or county assessor’s website. Have your Social Security Number or ITIN ready (or your entity’s FEIN, California Corporation Number, or Secretary of State file number). If more than one person owns the property, know each owner’s exact percentage. If you’ll be using the loss-or-zero-gain exemption or electing the alternative withholding calculation, gather your purchase documents so you can show adjusted basis and selling expenses.

The form runs three sides. Most sellers only touch Parts I, II, III (or IV), and the signature on Side 3.

Part I: Property Information

Enter the full street address of the property, the county, and the APN. Enter your ownership percentage. This percentage directly controls how much withholding applies to you if an exemption doesn’t fully cover the transaction, so if you own 40%, the calculation runs against 40% of the sales price or gain.

Part II: Seller Identification

Individual sellers enter their full legal name, current mailing address, and SSN or ITIN. Married couples and registered domestic partners who will file a joint California return can share one form and list both names and tax IDs. Entities use their FEIN, California Corporation Number, or Secretary of State file number instead.³

Part III: Full Exemptions

Part III is where most sellers can stop. If any box here applies, check it, skip Part IV, and move to the signature. No tax is withheld.⁴

Line 1, principal residence: the property qualifies under IRC Section 121, which generally requires you to have owned and lived in the home as your main residence for at least two of the five years before the sale. This is the most commonly used exemption.⁵
Line 2, last used as principal residence: you don’t meet the full two-of-five test, but the property was the last place you (or the decedent, in an estate sale) used as a principal residence.
Line 3, loss or zero gain: your adjusted basis equals or exceeds the amount you’ll realize after expenses. You must support this by completing Part VI.
Line 4, involuntary conversion: the property was seized, destroyed, condemned, or threatened with any of those, and you intend to replace it under IRC Section 1033.
Line 5, transfer to a controlled entity: the transfer qualifies for nonrecognition under IRC Section 351 or 721.
Line 6, corporation with a California presence: a corporation organized under California law or qualified with the Secretary of State. An out-of-state corporation that hasn’t qualified only gets this exemption if it keeps a California office permanently staffed by its own employees after the sale.⁴
Line 7, partnership or LLC taxed as a partnership: exempt at the entity level, though the partnership may still need to withhold on nonresident partners separately.
Line 8, tax-exempt entity: organizations exempt under the California Revenue and Taxation Code.
Line 9, sales price $100,000 or less: no withholding when the total combined sales price of all parcels in the transaction stays at or below $100,000.²

Part IV: Partial and Conditional Exemptions

Use Part IV only if nothing in Part III fit.⁴

Line 10: Like-Kind Exchange

A simultaneous IRC Section 1031 exchange is fully exempt from withholding. In a deferred exchange, withholding is also waived at the time of the initial transfer, but if you receive cash or other boot exceeding $1,500, withholding applies to the boot at 3⅓%.⁶ If the exchange later fails, the qualified intermediary must withhold 3⅓% of the full sales price. The seller still signs the perjury statement on Side 3; the buyer does not need to sign on an exchange.

Line 11: Installment Sale

When at least one payment will be made after the tax year of the sale, the REEP withholds 3⅓% of just the down payment at closing. The buyer then takes over, collecting 3⅓% from the principal portion of each future installment payment.⁴ This is the one scenario where the buyer must also sign Form 593. Attach a copy of the promissory note.

Line 12: No Exemptions Apply

Check this if nothing fits. The REEP will withhold 3⅓% of the total sales price unless you elect the alternative calculation in Part VI.

Part VI: Computation

Complete Part VI in two situations: you’re claiming the Line 3 zero-gain exemption, or you want the withholding figured on your estimated gain instead of the full sales price.

On the standard method, 3⅓% of the sales price can wildly overshoot your actual tax when the gain is small. The alternative calculation multiplies your estimated gain by the maximum California tax rate for your entity type.² Corporations use 8.84%. S corporations use 1.5%.⁷ Individuals use the highest marginal rate under Revenue and Taxation Code Section 17041, which for most sellers is 12.3%, or 13.3% for gain over $1 million.

In Part VI you enter the sales price, subtract selling expenses and your adjusted basis, and arrive at the estimated gain or loss. Zero or negative supports a Line 3 exemption. A positive figure, multiplied by your applicable rate, becomes the withholding amount under the alternative method. Estimates are allowed, but the FTB warns that your figures cannot manufacture a loss when you actually have a gain.⁴

Sign the Form

Side 3 holds the signature line. The form is not valid without your signature and date; you are declaring under penalty of perjury that the information is correct. This is the step people most often skip, and when they do, the escrow agent withholds the full 3⅓% by default no matter what boxes were checked.

When to Deliver It

The signed form must reach your REEP before escrow closes. There is no grace period. After closing, the REEP files the original with the FTB by the 20th day of the calendar month following the month escrow closed.⁴ If withholding was required, the REEP sends the funds with Form 593-V as the payment voucher. The FTB wants the form either way, as it serves as the transaction record.

If There Are Multiple Sellers

Each seller or co-owner generally needs a separate Form 593. The exception is married couples and registered domestic partners who will file jointly; they can share one form. When spouses appear on a single form, the FTB assumes equal ownership unless separate forms show different percentages. Getting the ownership percentage in Part I right matters, because that percentage drives each seller’s share of the withholding calculation.

Getting Withheld Money Back

Once escrow closes, you can’t recover withheld funds from the escrow company. The only path to a refund is filing a California return for the year of the sale and claiming the withholding as a credit. Residents use Form 540.⁸ Nonresidents and part-year residents use Form 540NR and attach a copy of Form 593.⁹ For a seller who owes no California tax, the entire withheld amount comes back, though processing can take several months.

Penalties for a Bad or Late Form

Filing a false exemption certificate to avoid withholding carries a penalty of $1,000 or 20% of the amount that should have been withheld, whichever is greater.¹⁰ On an $800,000 sale, where required withholding would be about $26,640, that penalty runs roughly $5,328 on top of the tax you still owe.

For 2026 transactions, late-filing penalties on Form 593 itself are:⁴

1 to 30 days late: $60 per seller
31 days to 6 months late: $130 per seller
More than 6 months late: $340 per seller

If the failure reflects intentional disregard rather than oversight, the penalty jumps to $680 or 10% of the required withholding, whichever is greater. A reasonable-cause exception exists, but not knowing about the form rarely qualifies.

1
Franchise Tax Board. Real Estate Withholding
2
California Legislative Information. California Code RTC 18662 – Withholding
3
Franchise Tax Board. California Form 593 – Real Estate Withholding Statement
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Franchise Tax Board. 2026 Instructions for Form 593 Real Estate Withholding Statement
5
Office of the Law Revision Counsel. 26 U.S. Code 121 – Exclusion of Gain From Sale of Principal Residence
6
Franchise Tax Board. Qualified Intermediary
7
Franchise Tax Board. S Corporations Business Type
8
Franchise Tax Board. 2025 Instructions for Form 540 Personal Income Tax Booklet
9
Franchise Tax Board. 2025 California 540NR Forms and Instructions – Nonresident or Part-Year Resident
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Franchise Tax Board. FTB 1024 – Penalty Reference Chart