Hello,
We're selling our house and need assistance completing the California Form 593 Real Estate Withholding Tax Statement form. Escrow informed us most people typically select #1 or #2 under Part III of the Certifications to exempt the sale from withholding.
1. The property qualifies as the seller's (or decedent's, if sold by the decedent's estate or trust) principal residence under Internal Revenue Code (IRS) Section 121.
2. The seller (or decedent, if sold by the decedent's estate or trust) last used the property as the seller's (decedent's) principal residence under IRC 121 without regard to the two-year time period.
Background: My husband has been on active duty in the military since 2007. Since CA is not our domicile, we filed nonresident tax returns in California when stationed here (2015 and now 2024). I work remotely for a company in CA. We lived in our home from 2015 (when it was purchased) - 2021. My husband received orders to PCS (Permanent Change of Station) to the East Coast between 2021 - 2024, so we rented the house until we decided to sell just recently upon moving back to CA. We did not move back into the house and are staying at a hotel. We've also received approval waivers for 588 Nonresident Withholding Waiver Request for each year we rented the home while away.
Are we still eligible for the exemption even though we rented out the house? If so, would we select #1 above?
