The California 597 W form serves as a Withholding Exemption Certificate and a Nonresident Waiver Request for Real Estate Sales. This form is essential for sellers who may qualify for exemptions from withholding taxes on the sale of real property in California. Understanding how to properly fill out this form can save you from unnecessary tax liabilities.
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The California 597 W form serves as an important tool for individuals and entities involved in real estate transactions, particularly for nonresident sellers. This form, known as the Withholding Exemption Certificate and Nonresident Waiver Request, is designed to determine whether a seller is exempt from withholding requirements on the sale of real property. It collects essential information about the seller, including their name, social security number, and property details. Additionally, the form includes a series of questions that help establish eligibility for exemptions based on factors such as the sale price of the property, residency status, and the nature of the seller's entity. If a seller qualifies for an exemption, they may provide this completed form to their escrow company or buyer, relieving them from the obligation to withhold a portion of the sale price for tax purposes. Conversely, if the seller does not meet the exemption criteria, they may be subject to withholding at a rate of 3 1/3% of the total sale price. The form also allows sellers to request a reduced withholding amount if they believe their tax liability will be significantly lower than the standard withholding amount. In this way, the California 597 W form plays a crucial role in ensuring compliance with state tax regulations while also providing relief for sellers who may face financial burdens during the transaction process.
YEAR
20
Withholding Exemption Certificate and
CALIFORNIA FORM
Nonresident Waiver Request for Real Estate Sales
597-W
Part I Withholding Exemption Certificate
Seller’s Information
Name
Social security no. CA corp. no. FEIN SOS file no.
Address
PMB no.
Note:
Failure to furnish your tax identifica-
tion number will void this certificate.
City, State, ZIP Code
Phone number
Ownership
(
)
percentage
Property address (if no street address, provide parcel number and county)
Read the following and check the boxes as they apply (see General Information C, Exemptions from Withholding (Part I)
in the instructions for definitions):
YES
NO
1. Is the total sale price of this property $100,000 or less?
.
. . .
. . . .
. .
. . . . .
2.Are you a resident of California? If yes, provide your California street address, city, and ZIP Code.
__________________________________________________________________________________________________________
3.
Does the property being sold qualify as your principal residence within the meaning of Internal Revenue Code (IRC) Section 121? .
4.
Is the seller a corporation that is qualified through the California Secretary of State or has a permanent place of
business in California? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Is the seller a partnership or a limited liability company (LLC) with recorded title to the property in the name of the partnership or LLC and will the partnership or LLC file a California tax return to report the sale and withhold on foreign and domestic nonresident partners as required? (Get FTB Pub. 1017, Nonresident Withholding Partnership Guidelines, for withholding information.) . . . . . . . .
6. Is the seller a tax-exempt entity under either California or federal law? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Is the seller an irrevocable trust with at least one trustee who is a California resident and will the trust file a California tax return to
report the sale and withhold when distributing California source taxable income to nonresident beneficiaries as required?
8.Is the seller an estate where the decedent was a California resident at the time of death and will the estate file a California fiduciary tax
return to report the sale and withhold when distributing California source taxable income to nonresident beneficiaries as required? . . .
9. Is the seller a bank or a bank acting as a fiduciary for a trust? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Is the seller an insurance company, Individual Retirement Account (IRA), or qualified pension/profit sharing plan? . . . . . . . . . . . . . .
Under penalties of perjury, I hereby certify that the information provided above is, to the best of my knowledge, true and correct. If conditions change, I will promptly inform the withholding agent. I understand that completing this form does not exempt me from filing a California income tax return to report this sale.
Seller’s name (or seller’s agent if seller is
not an individual) and title (type or print) ____________________________________________________________________________________________
Seller’s Signature_____________________________________________________________________________ Date:___________________________
If you answered “Yes” to any of the above questions, STOP HERE. You are exempt from the nonresident withholding requirements. Provide this form to your escrow company or the buyer (withholding agent).
If you answered “NO” to all of the above questions, you are subject to the nonresident withholding requirements. The required withholding is 3 1/3% of the total sale price. Do you expect your tax liability from the sale of this property to be substantially less than that amount? If so, would you like to request a reduced amount of withholding?
Yes. Complete the Nonresident Withholding Waiver Request (Part II) and send this form to the Franchise Tax Board (FTB).
No. STOP HERE. Your escrow officer will withhold 3 1/3% of the total sale price and send it to FTB on your behalf. Obtain the seller’s copy of Form 597, Nonresident Withholding Tax Statement for Real Estate Sales, from the escrow officer to attach to your California income tax return when you file and claim the amount withheld.
Escrow Officer: If withholding is required, complete Form 597, Nonresident Withholding Tax Statement for Real Estate Sales, and send one copy to the FTB with the payment of withholding and give two copies to the seller. The seller needs a copy of Form 597 to claim the withholding credit on the California tax return filed to report the sale.
For Privacy Act Notice, get form FTB 1131.
597W01109
Form 597-W (REV 2001) Side 1
Part II Nonresident Withholding Waiver Request (please print or type)
Name of seller (see instructions if more than one)
Seller’s Entity Type
Seller’s social security number (SSN)
Individual(s)
-
Mailing address
Corporation
California corporation no. FEIN
S Corporation
City, state, and ZIP Code (province, country, and postal zone)
Seller’s spouse’s SSN (if applicable)
Estate
Trust
Seller’s email address
Property Information
Property Address (if no street address, provide parcel number and county):
Seller acquired property by (check one):
Date seller acquired property:
Purchase
Inheritance
Foreclosure/Repossession
Gift
1031 Exchange
call (888) 792-4900 U.S. toll-free
Seller’s adjusted basis:
or (916) 845-4900
Other____________________
Purchase price
$
____________________________
Add: improvements
Use of property at time of sale:
Length of time used for this purpose:
Less: depreciation
Rental / Commercial
Adjusted basis
Secondary / Vacation home
Years ________ Months _________
Vacant land
Provide all required documentation listed in the instructions. Attach any other
Other (attach explanation)
documents necessary to verify the adjusted basis.
Escrow Information
Name and address of Escrow Company:
Escrow Company email address
Name of Escrow Officer:
Escrow number:
Escrow Company or Officer
FAX number:
telephone number:
Contract price (total sale price):
Estimated close of escrow date:
Buyer’s Information
Name of buyer (see instructions if more than one)
Buyer’s social security number (SSN)
Address (number and street, PO box or rural route)
PMB no. (if applicable)
Buyer’s spouse’s SSN (if applicable)
State in detail your reason for requesting a withholding waiver or reduced withholding. If there is more than one nonresident seller, attach a separate sheet listing additional nonresident seller’s information. See instructions for examples of situations for which a waiver or reduced withholding is allowed and for the required information and documentation.
Attach additional sheets if needed. The FTB cannot make a determination on your request unless you provide all required information and documentation. See instructions.
Seller’s Signature ____________________________________________________________________________________ Date: _____________________
Side 2 Form 597-W (REV 2001)
597W01209
Filling out the California 597 W form is an important step for sellers involved in real estate transactions. This form helps determine whether you qualify for any withholding exemptions or if you need to request a reduced withholding amount. It's essential to complete this form accurately to avoid any delays or issues with your sale.
After completing the form, ensure that you provide it to your escrow company or the buyer. If you have requested a waiver, send the form to the Franchise Tax Board (FTB). Keeping a copy for your records is also wise, as you will need it for your California income tax return.
What is the purpose of the California 597 W form?
The California 597 W form serves two primary purposes: it acts as a Withholding Exemption Certificate and a Nonresident Waiver Request for Real Estate Sales. Sellers use this form to certify their eligibility for exemption from nonresident withholding requirements when selling property in California. If certain criteria are met, such as the sale price being $100,000 or less, the seller may not be required to withhold taxes from the sale proceeds.
Who needs to complete the California 597 W form?
What information is required on the California 597 W form?
What happens if I answer "Yes" to any of the exemption questions?
What should I do if I expect my tax liability to be less than the withholding amount?
Filling out the California 597 W form can be a straightforward process, but there are common mistakes that individuals often make. Understanding these pitfalls can help ensure the form is completed accurately, which is crucial for compliance and avoiding unnecessary delays.
One frequent error is not providing complete seller information. The form requires specific details such as the seller's name, social security number, and address. Omitting any of this information can lead to complications. It is important to double-check that all fields are filled out correctly, as incomplete information can void the certificate and create issues down the line.
Another common mistake involves misunderstanding residency status. Sellers must indicate whether they are residents of California. If a seller checks "Yes" but does not provide a valid California address, this can lead to confusion. It’s essential to read the questions carefully and provide accurate information, as this affects the withholding requirements.
Additionally, many people fail to attach necessary documentation when requesting a withholding waiver. The instructions specify that certain supporting documents must accompany the form to verify claims. Without these attachments, the Franchise Tax Board may not process the request, leading to potential withholding that could have been avoided.
Lastly, some individuals overlook the importance of signing and dating the form. A signature is not just a formality; it certifies that the information provided is true and correct. Neglecting to sign or date the form can render it invalid, causing delays in the transaction process. Always remember to review the form thoroughly before submission to ensure that every requirement is met.
The California 597 W form is commonly used for withholding exemption and nonresident waiver requests related to real estate sales. Several other forms and documents often accompany this form during real estate transactions in California. Below is a list of these documents, along with a brief description of each.
Understanding these forms and documents can help streamline the real estate transaction process in California. It is important to gather all necessary paperwork to ensure compliance with state tax regulations and to facilitate a smooth closing.
The California 597 W form is a key document for nonresident sellers in real estate transactions. It shares similarities with several other forms used in tax and real estate matters. Here are four documents that are similar to the California 597 W form:
When filling out the California 597 W form, it is essential to follow certain guidelines to ensure accuracy and compliance. Here are seven things you should and shouldn't do:
There are several misconceptions about the California 597 W form, which is important for nonresident withholding related to real estate sales. Here are nine common misunderstandings:
Understanding these misconceptions can help sellers navigate the requirements related to the California 597 W form more effectively.
When dealing with the California 597 W form, understanding its purpose and how to fill it out correctly is essential. Here are some key takeaways to keep in mind:
By keeping these points in mind, you can navigate the complexities of the California 597 W form more effectively, ensuring compliance and potentially reducing your tax burden.