California Real Estate Sellers Spared By Governor Schwarzenegger
Professional real estate agents have been breaking the bad news to California property owners for years: Sales of secondary residence under California law may pay a whopping 3 1/3% estimated tax of the gross sales price. The tax is collected through escrow and it can be up to 14 months before filing tax returns to get the over-payment back. Many taxpayers feeling the crunch of this law will finally have some relief.
With California Assembly Bill AB 2962 approved and signed into law by California Governor Arnold Schwarzenegger, taxpayers will be able to choose a withholding amount. This amount will be based on the maximum income tax rate for individuals (9.3%) or corporations (8.84%) applicable to the actual capital gain on the sale of their real property. Taxpayers will also be required to complete a certification under penalty of perjury to the buyer to elect this withholding method. reach150
Assembly Bill AB 2962 is effective for sales of California real estate property closing on or after January 1, 2007. The Franchise Tax Board has provided a comparison chart highlighting the significant change. Industry professionals may be interested in reading the California Franchise Tax Board’s Analysis of Amended Bill and the Revised Analysis on Assembly Bill AB 2962.
Please note that this article is provided as information only, please consult a tax professional. Ask your local real estate agent about this law, it may help you save a bundle of money on the sale of your second home. Take advantage, California, and reap the full benefits of your next real estate transaction. Refer to the Mammoth Real Estate Blog for links to respective charts and analysis of this bill.