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Subject:  Capital Gains
From:  Ellie
Date:  Sat, 27 Mar 2004

My friend just sold his rental property and had to pay withholding for capital gains taxes. I thought taxes were just paid when you filed your income taxes, and he really didn't make much.

Answer

Date:  Fri, 2 Apr 2004

Hello Ellie,

California is collecting withholding for real estate sales to help with the budget mess. Your friend should show the withholding as a tax payment on his or her California income tax return to recover any tax withheld over the actual amount owed.

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

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