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Withholding on California Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What is Withholding?

Real estate withholding is a prepayment of state income taxes for sellers of California real property. Real estate withholding is not an additional tax on the sale of real estate but a prepayment of the income tax due on the gain from the sale of real property. Withholding is required on sales or transfers of California real property when the sales price exceeds $100,000 and does not qualify for an exemption.

In California all transferees (buyers) are required to withhold 3 1/3% of the total sales price unless exempt by reasons listed below. To document the exemption, the real estate escrow person (REEP) obtains a completed and signed under penalty of perjury (FTB from 593-C). Below are the exemptions listed on the FTB form 593C which would determine whether you qualify for a full or partial withholding exemption.

Certifications which fully exempt [Read More]

January 17th, 2019|Articles|

Build Wealth With After Tax Income

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What is the first rule of building wealth?  It can only be built with “after tax” income. Thus, if you lower your taxable income, it gives you greater ability to create wealth.  If you are reading this article to find out how ‘not’ to pay any taxes, stop and don’t waste your time. You are better served looking at websites that will tickle your ears with schemes that offer you to pay no taxes on income. I would also suggest looking at sites on Federal prisons, because perhaps you can negotiate which one you would like to spend some time in after the Feds catch up with you for tax evasion.  Yes, it hurts to pay a large chunk of your income in taxes and yes it sucks.  But, in the U.S., the privilege to earn a large sum of money also comes [Read More]

November 13th, 2018|Articles|

Business Meals Deductible Again

Ending months of speculation, the IRS has issued new guidance that allows business deductions for certain business meals, despite restrictions imposed by the new Tax Cuts and Jobs Act (TCJA) on entertainment expenses (IRS Notice 2018-76, 10/3/18). The new notice preserves deductions that many tax commentators thought were in doubt.
Now the IRS has clarified the rules in the new guidance. Under Notice 2018-76, taxpayers may deduct 50% of the cost of business meals if:
  • The expense is an ordinary and necessary business expense under Section 162(a) that are paid or incurred during the tax year when carrying on any trade or business;
  • The expense is not lavish or extravagant under the circumstances;
  • The taxpayer, or an employee of the taxpayer, is present when the food or beverages are furnished;
  • The food and beverages are provided to a current or potential business customer, client, consultant or similar business contact; and
  • For food [Read More]
October 18th, 2018|Articles|