March 2025

Selling or transferring real estate in California often comes with hidden costs. One of the most overlooked is the Documentary Transfer Tax (DTT) – a fee that can surprise even experienced property owners. However, many transfers qualify for exemptions that reduce or eliminate this tax entirely.

If you’re unfamiliar with how these exemptions work, you could end up paying thousands of dollars unnecessarily. The difference often comes down to legal knowledge and attention to detail. A qualified real estate attorney can help you take full advantage of every available exemption and avoid costly errors.

What Is the Documentary Transfer Tax?

The Documentary Transfer Tax is a one-time tax assessed on the transfer of real property in California. It is governed by California Revenue & Taxation Code §11911 and is typically …

The Foreign Investment in Real Property Tax Act (FIRPTA) requires buyers of U.S. real property interests from foreign sellers to withhold a portion of the purchase price and remit it to the Internal Revenue Service (IRS). This ensures that foreign sellers pay any applicable taxes on gains from U.S. property sales.

What Is FIRPTA Withholding?

Under FIRPTA, buyers must withhold 15% of the purchase price when acquiring U.S. real property from a foreign seller. The withheld amount is credited toward the seller’s potential tax obligations when they file a U.S. tax return.

Who Is Considered a Foreign Person?

FIRPTA applies only when the seller is classified as a foreign person, which includes:

• Nonresident aliens
• Foreign corporations that have not elected to be treated as domestic corporations
• Foreign partnerships, trusts, or