Withholding Tax Requirements for Sales of Real Property by Nonresidents of Maryland

 
On our “Seller Information Sheet” we ask if you are a nonresident of Maryland since an estimated payment of withholding tax payment must be made to the clerk of the court at the time the deed is submitted for recordation by Settlement Ink UNLESS you have obtained a Certificate of Full or Partial Exemption (FORM MW506AE (PDF))

An application for a full or partial exemption must be filed with the Comptroller no later than 21 days before the date of closing to permit the Comptroller to review the application and, if appropriate, issue a certificate before the date of closing. If you have less than 21 days from the date of closing, the Comptroller does not guarantee that your application will be reviewed in time but we highly recommend you give it a try.

For a nonresident individual (external link), the withholding payment is 7.5% of the sales price less expenses of sale and mortgages. In the case of multiple owners, withholding is required from each of the nonresident owners based on the percentage of their ownership.

At settlement, we will prepare Form MW506NRS (PDF) – Return of Income Tax Withholding for Nonresident Sale of Real Property. Settlement Ink must then present Copies A and B of Form MW506NRS to the Clerk of the Court, along with payment.

In addition to filing Form MW506NRS with a tax withholding payment, you are still required to file an end-of-the-year income tax return with Maryland for the year in which the sale occurred.

See the Maryland Handbook on this withholding tax for more information and frequently asked questions (PDF).

A nonresident entity must make an 8.25% payment. See Withholding Requirements for Sales of Real Property by Nonresidents (PDF).

Under this provision, a nonresident entity is an entity that is:

  • not formed under the laws of Maryland more than 90 days before the date of the sale of the property, and
  • not qualified by or registered with SDAT to do business in Maryland more than 90 days before the date of the sale of the property.

What Clients Say

Jeff

My Dearest “Settlement Sisters” Thanks so very much for the wonderful “birthday afternoon.” It was great to spend the time with you both and thanks for making me feel so special. Having lunch with you reminded me that… we need to do this more often. I always enjoy your company.  Much Love- Jeff

Lauren

Dear Everyone at Settlement Ink, I can’t express enough how appreciative and grateful I am for all of you, all the dedication and hard work you have put forth and how amazing and extremely pleasant you have been to work with! I will most definitely be recommending your immensely dedicated and capable office to everyone and anyone I know in the home buying process. You all showed amazing grace under the stress of the situation and  I look forward to working with you all in the future! (Under less stressful circumstances le’ts hope!) Again, it has been a great pleasure to meet and work with you all of you! Please enjoy these treats as a small token of my immense appreciation. Thank you, Lauren

Koki

Dear Joy, Thank you for helping us close on time. I appreciate you taking care of the title issue and keeping everyone calm. I’ll see you soon and lets get some new INK : ) Koki