Income taxes: withholding: real property sales.

Existing law requires the transferee of a California real property interest, in specified circumstances, to withhold for income tax purposes 313% of the sales price of the property when the property is acquired from either an individual, or a partnership or corporation without a permanent place of business, as specified. Existing law also allows, by election of the transferor, alternative withholding amounts that are not less than the amount of gain required to be recognized under income tax laws multiplied by the corporation tax rate, bank and financial corporate tax rate, the highest personal income tax rate, or the current "S" corporation tax rate plus the highest personal income tax rate, as applicable. Existing law imposes a penalty for a failure to withhold, as specified, and requires a real estate escrow person to provide written notification to the transferee, other than a transferee that is an intermediary or accommodator in a deferred exchange, of withholding requirements. This bill would eliminate these withholding provisions for the disposition of a California real property interest that occurs on or after January 1, 2018, and would instead require the transferee, including any intermediary or accomodator in a deferred exchange, of a California real property interest to withhold 3â…“% of the purchase price of the property if the property was either acquired from a person with a last known street address outside this state at the time of title transfer, or from a corporation if after the transfer that corporation has no permanent place of business in this state. The bill would also allow, by election of the transferor, alternative withholding amounts that are not less than the amount of gain required to be recognized under income tax laws multiplied by the corporation tax rate, bank and financial corporate tax rate, the highest personal income tax rate, or the current "S" corporation tax rate plus the highest personal income tax rate, as applicable. The bill would also require a real estate escrow person to provide the corresponding written notification to subject transferees.