What are withholding requirements on sold rental property from feds and california sold in 2017?

Are you married? DId you *and* your spouse live in the property as your primary residence for "at least" 2 of the last five years, counting backwards from the closing date you sold it? That comes to 731 days of the last 1826 days you owned it, and the day count does not include the closing date of your sale.
Basically, if *bith* you and your spouse lived in the property as your primary residence for at least 731 days of the last 1826 days you owned it, then you can exclude a maximum of $500,000 gain from taxation.
If only you lived in it at your primary residence for at least 731 days of the last 1826 days you owned it, then you can exclude $250,000 of your gain from taxation. It also matters what the classification of the property was when you sold it - rental or personal use/primary residence.

Thanks Carl.  We never lived in the property.  It was always a rental unit.  I'm now concerned with how much I have to provide the feds in withholding this year to prevent having to pay a penalty next year.

My general rule on this is to send the IRS at least 20% of the as-of-yet untaxed earnings. In your case, that would be 20% of your gain. To determine more accurately what you taxable gain is, take what you paid for the property and subtract from that the total depreciation you have taken on the rental since you owned it. That gives you your adjusted cost basis.
Now subtract that cost basis from your sales price, and that will give  you (roughly) your taxable gain. Send the IRS 20% of that gain and come tax time, you'll be fine.
You can pay that 20% online if you like, directly to the IRS at <a rel="nofollow" target="_blank" href="http://www.irs.gov/directpay">http://www.irs.gov/directpay</a>. Make sure you print your receipt and file it with your 2017 tax paperwork so you'll have it at tax prep time. Also, if your state taxes personal income you should also go ahead and send your state 20% of your gain also.
In the end when you actually file the tax return, you'll probably end up getting some that refunded to you. But if not and you end up owing, so long as what you owe is less than 10% of your total tax liability, no underpayment penalties will be assessed.

You have the ability to estimate what that will be by doing a test copy or what if return ... to get the sale to show up (and get an estimate) use 12/31/16 as the sale date in the test return ... then switch to the forms mode to see how it effects your return ....

If you want to play around with different figures and tax scenarios without affecting your original return you can

>>>In the TurboTax CD/Download software by creating a test copy:

1.  Open your return in TurboTax.

2.  From the File menu, choose Save As.

3.  Give the copy a new name to distinguish it from the original (for example, by adding "Test" or "Example" to the file name).

4. Click  Save. You are now safely working in the test copy and anything you do here will not affect the original.

 https://ttlc.intuit.com/questions/1900642-how-to-make-a-test-copy-of-your-return

 

>>OR  use the WHAT IF tool:

- Click Forms Icon (upper right of screen) or Ctrl 2 (forms view)

- Click on the Open Form Icon

- In the “Type a form name.” area type What-If (with the dash), click on the name of the worksheet - click on Open Form

- You will see the worksheet on the right side of the screen; enter the information right into the form

- To get back to interview mode - click on the Step-by-Step Icon (upper right of screen) or Ctrl 1