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News & Press: Sacramento Report

CLTA Opposes Tax Withholding for 1031 Exchanges

Tuesday, April 17, 2018  
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Assembly Bill 2529 (Chu) removes the withholding exemption for a 1031 exchange if the replacement property is located outside of California. A qualified intermediary would be obligated to withhold 3.33% of the sales price where the replacement property is outside of California. It appears that a taxpayer could lose a portion of their equity (3.33% of the sale price) intended for reinvestment. The CLTA opposes the measure as an unnecessary impediment to tax-deferred exchanges involving the disposition of California property.

CLTA is part of a larger coalition now opposing the bill; other members of the coalition include the California Escrow Association, California Building Industry Association, California Business Properties Association, and the California Association of Realtors. The bill was to be heard on April 16th, but was withdrawn by the author as his staff explores whether or not the existing reporting and tracking provisions provided under existing law are already satisfactory for their goals, thereby negating the need for this legislation.

California Land Title Association

1215 K Street #1816 Sacramento, CA 95814-3905
Email:  |  Phone: 916-444-2647  |   Fax: 916-444-2851