The state FTB has agreed to delay implementation of its withholding requirement for property managers who manage California residential property for out-of-state owners. The FTB will use 2009 to educate management companies and other agents about this requirement and will begin to enforce the withholding in 2010. According to the FTB they will “focus on education and outreach, [and] residential property managers will be given time during 2009 to come into compliance with the nonresident, quarterly withholding program, with the goal of full compliance by 2010.”

Earlier this year  the FTB  reviewed existing regulations and ruled that residential rental property managers must now withhold a portion of the rent collected from a California residential property before sending the proceeds to an out-of-state client. Commercial property has been subject to a withholding requirement for a number of years, but this was the first time that residential property would fall under the same rule. Under the old guidelines, residential property was  exempted from withholding requirements.

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