Deed - 1598 Washington Ave - File 1318, 1996

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Instructions for Form 590-RE Nonresident Withholding Exemption Certificate for Real Estate Sales Reference in these instrucnons are to the Internal Revenue Code (IRC) as of January 1, 1993, and to the California Revenue and Taxation Code (R&TC) General Information • The seller is a California trust. For with- F What is a Principal Residence holding purposes, an irrevocable trust is con - A Purpose of Form sidered a California trust if at least one Usually, the home in which you live is your princi- Use Form 590-RE to obtain an exemption from p trustee is a California resident. Irrevocable trusts are required to withhold on distributions pal residence. If you have more than one home, only the sale of your main home qualifies as a withholding for the sale of California real estate. of California source income to their nonresi- sale of a principal residence. If you have two The completed Form 590-RE should be pre dent beneficiaries. homes and live in both of them, the main home sented to the buyer or other withholding agent Note: This applies only to irrevocable non - is the one lived in most of the time. A mobile and retained in their records for a period of five grantor trusts. Irrevocable trusts cannot be home, houseboat, cooperative apartment, or con - years following the close of the transaction. The revoked by the grantor. The grantor is the dominium can also be a principal residence. buyer will be relieved of the withholding require- menu if the buyer relies in good faith on a cam- person(s) who transferred (granted) assets to Property may quality as your principal residence pleted and signed Form 590-RE. the trust. An irrevocable trust is also called a even if you temporarily rent I out while it is in the non -grantor trust because the trust does not process of being said, as long as it is rented out B Law have a provision to allow the grantor to only as a matter of convenience or for another R&TC Section 18662 requires withholding of revoke the trust. A revocable or grantor trust nonbusiness purpose. IRC Section 1034 does income (or franchise) tax when California real does have a provision allowing the grantor to revoke the trust and take back the assets. not contain a bright -line test for determining what is considered temporary. In federal case law on estate is sold by a nonresident. The grantor of a grantor trust shall be treated this subject, the Tax Court considered the facts C When Should this Form as the seller of real estate owned by such a and circumstances of each case, including the trust. Therefore, if the seller is a revocable or intent of the seller, to determine if the property be Used grantor trust and one or more of the grantors met the definition of principal residence at the The certifications on Side 1 should be completed is a nonresident, withholding is required. If all time of sale. Generally, if the property is rented when: of the grantors of a revocable or grantor trust out for less than a year while it is on the market, are residents no withholdin is r uired it will still be considered a principal residence for • The seller is a California resident on the date escrow closes. Residents of California who have an out-of-state address to which funds are disbursed will need to complete Form 590-RE to be exemot from withholding. Form 590-RE will not become invalid if the seller moves out of California after the close of escrow. • The property meets the definition of princi- pal residence under IRC Section 1034 at the time escrow closes. Form 590-RE can be signed even if you do not plan to pur- chase a new home or if the purchase price of your new home is less than the sales price of your old home. Recognition of this gain in the year of sale or in subsequent years will be taxable to California and must be reported on a California tax return. • The seller is a California estate. For with- holding purposes, an estate is considered a California estate if the decedent was a Cali- fornia resident at the time of death. Estates are required to withhold on distributions of California source income to their nonresident beneficiaries. • The seller is a corporation that has a per- manent place of business in California immediately after the transfer. • The seller is a partnership and the recorded title to the property is In the name of the partnership. A partnership may be required to withhold on distributions of California source income to nonresident partners. For more information get FTB Pub. 1017, Nonresident Withholding — Part- nershio Guidelines. • The seller is an LLC and the recorded title to the property is in the name of the LLC. An LLC may be required to withhold on distri- butions of California source income to non- resident members. For more information get FTB Pub. 1017. • The seller is exempt from tax under either California or federal law. For withholding purposes, this includes the insurance compa- nies. IRAs and pension and profit sharing plans. 9 eq withholding purposes. You should evaluate your D Requirement to File a factual situation, the law, and applicable federal California Return case law to determine if the property qualifies as your principal residence within the meaning of A completed Form 590-RE exempts the seller from withholding but does not eliminate the requirement to file a Califomia tax return and pay the tax due. E Who is a Resident A California resident is every individual who is in California for other than a temporary or transitory purpose or any individual domiciled in California who is absent for a temporary or transitory purpose. An individual domiciled in California who is absent from California for an uninterrupted period of at least 546 consecutive days under an employment -related contract is considered out- side California for other than a temporary or tran- sitory purpose. This does not apply if an individual has income from stocks, bonds, notes or other intangible personal property in excess of 5200,000 in any taxable year in which the employment -related contract is in effect. A spouse who is absent from California for an uninterrupted period of at least 546 days to accompany a spouse under an employment - related contract is considered outside of Califor- nia for other than a temporary or transitory purpose. Sellers who are uncertain of their residency sta- tus can get assistance in determining their resi- dency status by calling the Franchise Tax Board Information Center at the numbers listed below: From within the United States, call ............... 1-800-852.5711 From outside the United States, call ............... 1-916-845-6500 For hearing impaired with TOD, call ............... 1-800-822-6268 Sellers may also get FTB Pub 1031, Guidelines for Determining Resident Status, for more information. IRC Section 1034. For more information, get Federal Publication 523, Selling Your Home. G What is Not a Principal Residence The following are not principal residences under IRC Section 1034: 1. Rental property. 2. Part of home used for business. 3. Vacant land. 4. Vacation home or second home. Withholding is required on sales of these types of properties unless another withholding exception is met or a waiver of withholding is obtained. Get Form 597-A, Nonresident Withholding Waiver Request for Real Estate Sales, for more information. H What is a Permanent Place of Business A corporation has a permanent place of business in this state if it is organized and existing under the laws of this state or if it is a foreign corpora- tion qualified to transact intrastate business by the California Secretary of State's Office. A cor- poration which has not qualified to transact intra- state business (e.g., a corporation engaged exclusively in interstate commerce) will be con- sidered as having a permanent place of business in this state only If it maintains a permanent office in this state which is permanently staffed by its employees. For more information contact: Franchise Tax Board Withhold at Source Unit P.O. Box 651 Sacramento, CA 95812-0651 Telephone: (916) 845-4900 FAX (916) 845-4831 Side 2 Form 590-RE Instructions (REV. 1994)