Should there be withholding when I sell a rental home?

April 19, 2004

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

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