Professional real estate professionals have already been breaking the bad news to California property owners for several years: Sales of secondary residence under California law may pay a whopping 3 1/3% estimated tax in the gross sales price. The tax is collected through escrow also it can be around 14 months before filing tax returns to have the over-payment back. Many taxpayers feeling the crunch with this law will finally incorporate some relief.
With California Assembly Bill AB 2962 approved and signed into law by California Governor Arnold Schwarzenegger, taxpayers are able to choose a withholding amount. This amount will be based about the maximum tax rate for individuals (9.3%) or corporations (8.84%) applicable to the actual capital gain about the sale in their real property. Taxpayers may also be needed to complete a certification under penalty of perjury for the buyer to elect this withholding method.
Assembly Bill AB 2962 works well for sales of mammoth houses for sale closing on or after January 1, 2007. The Franchise Tax Board provides an evaluation chart highlighting the significant change. Industry professionals may be curious about reading the California Franchise Tax Board’s Analysis of Amended Bill and also the dexqpky92 Analysis on Assembly Bill AB 2962.
Take note that this information is provided as information only, please consult a tax professional. Ask your nearby real estate broker regarding this law, it may well help save a lot of money of capital in the sale of your second home. Make use, California, and reap the complete great things about your upcoming real-estate transaction. Talk about the Mammoth Property Blog for links to respective charts and analysis on this bill.