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California 593 and selling 2 properties together

Forum|Forum|1 year ago
July 19, 2024
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Hello, while we were living in California we bought a vacation home in 2004 for $350,000. Later in 2015, we bought vacant land near the vacation home for $13500 so that we had special HOA amenities. In 2020 we moved to Idaho selling our main residence but kept our vacation home and vacant lot.

Currently, we have decide to sell the California vacation home and vacant lot together as one for $562,500. We are currently in a quick escrow. What led me to ask this question right now is that the Title Company has handed me a 593 to fill out prior to closing (I didn't realize that I would be figuring out my 2024 taxes so early!).

My first question would be as to how do I enter this transaction in TurboTax? Is it listed as a single sale or does it need to be broken out? There were many improvements that would increase my basis on the home whereas no improvements were made on the vacant land.

The second question would be as to how accurate does the 593 have to be? Does it have to match my tax return that I file in 2024 (obviously my tax return next year would include both Idaho and California State filings). The title company has not even given me estimated closing costs yet nor have I fully figured out my cost basis on the vacation home yet. Any help would be much appreciated.

Best answer by pk12_2

@UncleSamPayer California collects/withholds taxes on the transfer of a property at source i.e. at the time of closing. This done through then use of form 593. If you look at the form , you will see that it is asking for details of the transaction and "roughly" the gain in the transaction without considering your taxable income as a whole i.e. the transaction in isolation.

It then computes the tax on this income ( the gain ) at a nominal rate -- think now its is 3.3% . This tax is withheld and then transmitted to the state by the closing entity/ title company. One thing to note is that when you file your tax return for California ( next year ) you need to include this withholding as amount " withheld" not as "estimated" payment. I made that mistake and learned the hard way.

You do not need to compute your 2024 tax return to file the form 593.

Does this help ?

P

pk12_2Answer

Employee

@UncleSamPayer California collects/withholds taxes on the transfer of a property at source i.e. at the time of closing. This done through then use of form 593. If you look at the form , you will see that it is asking for details of the transaction and "roughly" the gain in the transaction without considering your taxable income as a whole i.e. the transaction in isolation.

It then computes the tax on this income ( the gain ) at a nominal rate -- think now its is 3.3% . This tax is withheld and then transmitted to the state by the closing entity/ title company. One thing to note is that when you file your tax return for California ( next year ) you need to include this withholding as amount " withheld" not as "estimated" payment. I made that mistake and learned the hard way.

You do not need to compute your 2024 tax return to file the form 593.

Does this help ?

U

UncleSamPayerAuthor

Thanks for the reply but I am still having difficulty finding out how I enter the two properties together. On the form 593, it is asking for the original purchase price (line 16). Do I enter the sum of the original purchase price of the house and lot together and then the combined selling price for both (line 13) as a single transaction? My hesitation is that when I do my taxes next year, TurboTax will likely ask me for the purchase dates. Would I just then enter the purchase date of the house and then the sale date of both? I'm really having difficulty finding information on this. Thanks.