California Assembly Bill 2962 revises Revenue and Taxation Code Section 18662 and 18668 for sales of California real property that close on or after January 1, 2007. The new law allows a seller to elect an alternative to the current withholding requirement based on 3 1/3 percent of the sales price. A seller will be able to choose a withholding amount based on applying the seller’s estimated gain to a maximum tax rate. The maximum tax rates are as follows:

  • 9.3% for individuals
  • 8.84% for corporations
  • 10.84% for banks and financial corporations

If such an election is made, the seller is required to certify the alternate withholding amount in writing under penalty of perjury. The Franchise Tax Board (FTB) will have new forms available in mid to late December. Additionally, the FTB willprovide an electronic form on its website to assist sellers in calculating the amount of gain and the alternate withholding amount.