Indian Springs Real Estate
Serving Indian Springs & The Coachella Valley | | Phone: (760) 537-0346

Foreign Seller Tax Withholding

General Withholding Rules on Foreign Seller Sales
by Michael Brooks, Esq.
(760) 346-6140 or (844) 260-6140
www.directsllp.com
 
The General IRS Rule: 
The IRS requires the escrow company to withhold 15% of the sales price on the sale of United States real property interests by foreign persons (on sales above $1,000,000), and either 15% or 10% on sales between $300,001 and $1,000,0000, and either 15% or $0 for sales of $300,000 and under. The lower withholding amount at both levels requires the buyer to purchase the property with the intent to use it as a residence.
 
The General FTB Rule:
California requires withholding of 3.3% of the sales price (or 12.3%of the gain optional rate, or 0 withholding in a loss sale, but the 0 withholding in a loss sale is only available if the IRS has issued the foreign seller an individual taxpayer ID number (“ITIN”) by the closing date, otherwise seller is stuck with 3.3% x sales price.) California requires withholding on: all individuals (even California residents); non-California partnerships; non-California corporations; most trusts; estates.