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Instructions for Form 593-I

Real Estate Withholding Installment Sale Acknowledgment

What’s New

certified by the seller. There is no withholding

appropriate box and use this percentage as

on the interest portion of the installment

part of the calculation for withholding on the

Withhold on Installment Sale Elect-out

payment.

principal portion of each installment payment.

Method – If the seller elects not to report

If you are the buyer, you must withhold on the

Foreign Address – Enter the information in

the sale on the installment method (Internal

principal portion of each installment payment

the following order: City, Country, Province/

Revenue Code Section 453[d]), the seller

and complete Form 593-

. Have your real

Region, and Postal Code. Follow the country’s

must file a California tax return and report the

estate escrow person send the completed

practice for entering the postal code. Do not

entire sale on Schedule D-1. After filing the tax

Form 593-

, a copy of the promissory note, the

abbreviate the country’s name.

return and reporting the entire gain, the seller

seller’s certified Form 593, and Form 593-V, to

must submit a written request to the Franchise

Part III – Installment

the FTB with the withholding on the principal

Tax Board (FTB) to release the buyer from

portion of the first installment payment.

Acknowledgment

withholding on the installment sale payments.

Once the request is received, FTB will issue an

The withholding agent retains this form for a

Attach a copy of the signed promissory note to

approval or denial within 30 days.

minimum of five years and must provide it to

Form 593-

and the seller’s signed certification

the FTB upon request.

of Form 593.

General Information

Specific Instructions

Part IV – Buyer’s

For taxable years beginning January 1, 2010,

use Form 593-V, Payment Voucher for Real

Acknowledgement to

Buyer Instructions

Estate Withholding, to submit real estate

Withhold

withholding payments. Do not use Form 593,

Complete all four parts of Form 593-

Real Estate Withholding Tax Statement,

By signing Part IV, you acknowledge that you

Part I – Buyer’s Information

or Form 593-

, Real Estate Withholding

will:

Installment Sale Acknowledgement, to remit

Enter your name as it is shown on the escrow

• Withhold on the principal portion of each

payments.

instructions. Each buyer is required to withhold

installment payment.

Installment Sales – For installment sales

on individual payments and must complete

• Authorize the real estate escrow person to

occurring on or after January 1, 2009, buyers

a separate Form 593-

. However, if you are

withhold the required amount only on the

are required to withhold on the principal

purchasing the property with your spouse/RDP

first installment payment.

portion of each installment payment if the sale

and both of you will be on the promissory

• Withhold 3 1/3% (.0333) or the Optional

of California real property is structured as an

note, then include both of your names, social

Gain on Sale withholding percentage, as

installment sale.

security numbers (SSNs) or individual taxpayer

specified by the seller on Form 593, on

identification numbers (ITINs), and signatures

the principal portion of all subsequent

Registered Domestic Partners (RDP) – Under

on one form. If the buyer is a business, enter

installment payments.

California law, RDPs must file their California

the business name in the business name field.

• Give one copy of Form 593 to the seller by

income tax returns using either the married/

The buyer’s identification number (SSN, ITIN,

the 20th day of the month following the

RDP filing jointly or married/RDP filing

federal employer identification number (FEIN),

month of the installment payments.

separately filing status. RDPs have the same

CA corporation (Corp) no., or Secretary of

• Send each withholding payment, with

legal benefits, protections, and responsibilities

State (SOS) file no.) is required on each form

Form 593-V, and the completed Form 593

as married couples unless otherwise specified.

to be valid.

to the FTB by the 20th day of the month

If you entered into a same-sex legal union in

following the month of the installment

Foreign Address – Enter the information in

another state, other than a marriage, and that

payment (you do not need to obtain

the following order: City, Country, Province/

union has been determined to be substantially

seller’s signature on each subsequent and

Region, and Postal Code. Follow the country’s

equivalent to a California registered domestic

completed Form 593).

practice for entering the postal code. Do not

partnership, you are required to file a California

• Promptly inform the FTB if the terms of

abbreviate the country’s name.

income tax return using either the married/RDP

the installment sale, promissory note, or

filing jointly or married/RDP filing separately

Part II – Seller’s Information

payment schedule change.

filing status.

• Be subject to penalties if you do not:

Enter the seller’s name as it is shown on

For purposes of California income tax,

•

Withhold on the principal portion of each

the escrow instructions. Use a separate

references to a spouse, husband, or wife also

installment payment.

Form 593-

for each seller included on the

refer to a California RDP, unless otherwise

•

Send the withholding along with form 593

promissory note. However, if the sellers are

specified. When we use the initials RDP they

to the FTB by the due date.

spouses/RDPs and both of them will be on the

refer to both a California registered domestic

•

Send one copy of form 593 to the seller by

promissory note, then include both of their

“partner” and a California registered domestic

the due date.

names and SSNs or ITINs on one form. If the

“partnership,” as applicable. For more

Make sure you copy all pages so you will

seller is a business, enter the business name in

information on RDPs, get FTB Pub. 737, Tax

have the instructions for withholding on

the business name field.

Information for Registered Domestic Partners.

subsequent payments. Give the original, with a

The seller’s identification number (SSN, ITIN,

copy of the promissory note, and a completed

Purpose

FEIN, CA Corp no., or SOS file no.) is required

Form 593, to your real estate escrow person.

on each form to be valid.

When California real estate is sold on an

When you make subsequent installment

installment basis, the buyer is required to

If the seller is electing the Optional Gain

payments, withhold either 3 1/3% (.0333) of

withhold on the principal portion of each

on Sale withholding amount, ask the seller

the total sales price, or Optional Gain on Sale

installment payment, an amount based on

to provide you the installment withholding

withholding percentage, as specified by the

either 3 1/3% (.0333) of the total sales price,

percentage that the seller calculated in the

seller on Form 593, on the principal portion of

or the Optional Gain on Sale withholding

instructions for the Form 593. Include this

each installment payment. Mail withholding

amount from Form 593, line 5, which is

installment withholding percentage in the

payments with Form 593-V, and a completed

Form 593 for each withholding payment.

Form 593-

Instructions 2011 Page

California Form 593-I Draft - Real Estate Withholding Installment Sale Acknowledgement - 2012 Page 3

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