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Instructions for Form 593-I

Real Estate Withholding Installment Sale Agreement

What’s New

both of them will be on the promissory note, then

We update our forms annually, so make certain

include both of their names and social security

you use the most current form. For more

Registered Domestic Partners – For purposes

numbers or individual taxpayer identification

information on withholding on installment

of California Income tax, references to a spouse,

numbers on one form. The seller’s taxpayer

payments, see the instructions for Form 593 or

a husband, or a wife also refer to a Registered

identification number (social security number or

call Withholding Services and Compliance at

Domestic Partner (RDP) unless otherwise

individual taxpayer identification number if an

(888) 792-4900 (US toll free) or (916) 845-4900

specified. For more information on RDPs, get

individual) is required for the agreement to be

(not toll-free).

FTB Pub. 737, Tax Information for Registered

valid. If the seller is electing the Optional Gain on

Real Estate Escrow Person

Domestic Partners.

Sale withholding amount, ask the seller to provide

Purpose

Instructions

you the installment withholding percentage that

the seller calculated in the instructions for the

When California real estate is sold on an

If the buyer has agreed to withhold on the

Form 593. Include this installment withholding

installment basis, the buyer must withhold either

principal portion of each installment payment

percentage in the appropriate box and use

3 1/3% of the total sales price or the Optional

instead of withholding on the full amount at the

this percentage as part of the calculation for

Gain on Sale withholding amount from line 5 of

time of transfer, withhold either 3 1/3% or the

withholding on the principal portion of each

Form 593, Real Estate Withholding Tax Statement,

Optional Gain on Sale withholding percentage, as

installment payment.

which is certified by the seller. However, as part of

specified by the seller on Form 593, of the first

an installment agreement, the seller can ask the

Part III – Installment Agreement

installment payment. Make a copy of this form for

buyer to withhold on the principal portion of each

your records. Send the completed Form 593-

, a

Attach a copy of the signed promissory note to

installment payment rather than withholding the

copy of the promissory note, and seller’s certified

Form 593-I (showing the installment payment

full amount at the time escrow closes. If the seller

Form 593 with the required withholding amount

required) and seller’s signed certification of

chooses this method, the buyer must agree either

on the first installment payment. Refer to the Form

Form 593 (if seller elected this method), or this

to withhold 3 1/3% or the installment withholding

593 instructions for further information.

agreement will not be valid.

percentage specified by the seller in the seller’s

Interest and Penalties

section on Form 593-

, on the principal portion

Part IV – Buyer’s Agreement to

Interest will be assessed on late withholding

of each installment payment. If you are the buyer

Withhold

payments and is computed from the date due to

and plan to withhold on the principal portion of

By signing this agreement, you agree to:

the date paid. If the real estate escrow person

each installment payment, complete Form 593-

does not notify the buyer of the withholding

and have your real estate escrow person send the

• Authorize the real estate escrow person to

requirements in writing, the penalty is the greater

completed Form 593-

, a copy of the promissory

withhold only on the first installment payment.

of $500 or 10% of the required withholding. If

note, and seller’s certified Form 593 to the

• Withhold 3 1/3% or the Optional Gain on Sale

the buyer (after notification) or other withholding

Franchise Tax Board (FTB) with the withholding

withholding percentage, as specified by the

agent does not withhold, the penalty is the greater

on the first installment payment. If you do not

seller on Form 593, on the principal portion of

of $500 or 10% of the required withholding. If

complete Form 593-

and send it to us, you must

all subsequent installment payments.

the buyer or other withholding agent does not

withhold either the full 3 1/3% of the total sales

• Give one copy of Form 593 to the seller by the

furnish complete and correct copies of Form 593

price or the Optional Gain on Sale withholding

20th day of the month following the month of

to the seller by the due date, the penalty is $50

amount on Form 593, line 5, that is certified by

the installment payments.

per Form 593. If the failure is due to an intentional

the seller.

• Send each withholding payment along with

disregard of the requirement, the penalty is

the completed Form 593 (you need not obtain

Do not complete this form if you are the buyer

the greater of $100 or 10% of the required

seller’s signature on each subsequent and

and you do not plan to withhold on the principal

withholding. If the buyer or other withholding

completed Form 593) to the FTB by the 20th

portion of each installment payment. Instruct

agent does not furnish complete and correct

day of the month following the month of the

your real estate escrow person to withhold either

copies of Form 593 to the FTB by the due date

installment payment (see information below

the full 3 1/3% of the total sales price or the

but does file them within 30 days of the due date,

on interest and penalties).

Optional Gain on Sale withholding amount on

the penalty is $15 per Form 593. If Form 593 is

• Promptly inform the FTB if the terms of the

line 5 of Form 593 that is certified by the seller.

filed more than 30 days after the due date, the

installment sale, promissory note, or payment

You will not have a withholding requirement on

penalty is $50 per Form 593. If the failure is due

schedule change.

subsequent installment payments.

to an intentional disregard of the requirement,

If you sign this agreement, make a copy of this

Buyer Instructions

the penalty is the greater of $100 or 10% of the

form. Make sure you copy both sides so you

required withholding.

Complete all four parts of Form 593-

will have the instructions for withholding on

Additional Information

Part I – Buyer’s Information

subsequent payments. Give the original, with a

copy of the promissory note, and a completed

Enter your name as it is shown on the escrow

Assistance for Persons with Disabilities

Form 593, to your real estate escrow person.

instructions. Each buyer agreeing to withhold on

We comply with the Americans with Disabilities Act.

When you make subsequent installment

individual payments instead of withholding the full

Persons with hearing or speech impairments, call:

payments, withhold 3 1/3% or Optional Gain on

amount at the time of sale must complete a separate

TTY/TDD . . . . . . . . . . . . . . . . . . . (800) 822-6268

Sale withholding percentage, specified by the

Form 593-

. However, if you are purchasing the

seller on Form 593, on the principal portion of

Asistencia Telefonica y en el Internet

property with your spouse/RDP and both of you

each installment payment. You must complete

Dentro de los Estados Unidos,

will be on the promissory note, then include both of

Form 593 for each withholding payment.

llame al . . . . . . . . . . . . . . . . . . (800) 852-5711

your names, social security numbers or individual

However, you do not need to obtain the seller’s

Fuera de los Estados Unidos,

taxpayer identification numbers, and signatures

signature on each subsequent Form 593. When

llame al . . . . . . . . . . . . . . . . . (916) 845-6500

on one form. The buyer’s taxpayer identification

you send the withholding on the final installment

(cargos aplican)

number (social security number or individual

payment, write “Final Installment Payment” on the

taxpayer identification number if an individual) is

Sitio en el Internet:

bottom of Form 593. You can get Form 593 by:

required for the agreement to be valid.

Asistencia para Personas Discapacitadas

Internet:

Part II – Seller’s Information

nosotros estamos en conformidad con el Acta

Phone:

(888) 792-4900 (toll-free)

de Americanos Discapacitados. Personas con

Enter the seller’s name as it is shown on the

Mail:

TAx FORMS REqUEST UnIT

problemas auditivos o dificultad con el habla

escrow instructions. Use a separate Form 593-I

FRAnCHISE TAx BOARD

pueden llamar al:

for each seller included on the promissory note.

PO BOx 307

TTY/TDD . . . . . . . . . . . . . . . . . . . (800) 822-6268

However, if the sellers are spouses /RDPs and

RAnCHO CORDOvA CA 95741-0307

Form 593-

Instructions

2007

California Form 593-I Draft - Real Estate Withholding Installment Sale Agreement - 2008 Page 3

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