Tina, Home Seller in Baltimore, MD

MD Non-Resident Seller Transfer Withholding Tax

Asked by Tina, Baltimore, MD Fri Oct 10, 2008

I have a house in Baltimore, MD, that's about to go under contract to be sold and was hoping I could get some clarification. I moved to Florida for a job in April and my realtor is telling me that if I'm no longer a MD resident, then I will be subject to a non-resident seller transfer withholding tax at closing. My question is what constitutes no longer being a resident of Maryland? I have yet to file an income tax return in Florida. I own this house with my ex-husband who is still a resident of Maryland so does that nullify this withholding tax? Lastly, is this a withholding on proceeds only because as it stands I will be losing $30,000 on the sale of this house.

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9
I would speak to a CPA about this. Not sure but I don't think the realtor is correct. I think you have two valid points in your arguement. Sorry I didn't know for sure.
1 vote Thank Flag Link Fri Oct 10, 2008
Hi Tina, consult your CPA
0 votes Thank Flag Link Sat Feb 23, 2013
If you are a non reisdent of MD and clearly sell a property for a loss is their a seller transfer tax withheld?
0 votes Thank Flag Link Wed Feb 20, 2013
What is the basis for computing the 7% withholding tax at settlement?
0 votes Thank Flag Link Tue Aug 14, 2012
Tina! Wait! I have a similar situation. If your MD home was your prinicipal residence 2 out of the last 5 years, you can file for an exemption to the non-resident tax. You must do this at least 21 days before closing. Get form MW506AE from http://forms.marylandtaxes.com. I talked to Ms. Stevens regarding this just today. Call her at 410-260-6153 to clarify. Maryland follows the same rules as the federal goverment regarding primary residence. I hope this helps you!
Joy
0 votes Thank Flag Link Mon Nov 17, 2008
Just in case anyone need to fill out a form MW506AE, I found a blank form in this link http://goo.gl/5YDcRV. This site PDFfiller also has several related forms that you might find useful.
Flag Thu Feb 5, 2015
Hi Tina,
On the MD. non resident seller tax addendum there is a phone number to contact the Comptrollers office. That is who you should contact. I have dealt with this before and had my seller contact them. They are the ones that can give you an exemption, if you are entitled. I had a non resident seller who was getting proceeds back at the table, even though he was actually taking a loss on the property. They would have with held money if he had not addressed this in the beginning. He was able to show the loss and therefore they gave him an exemption. I would contact them now so you know where you stand but I don't think they will do anything until you have a ratified contract. I think it will take about 2 weeks for them at that point. Good luck to you.Kim Mills
Web Reference: http://www.kimandrenie.com
0 votes Thank Flag Link Sat Oct 11, 2008
Tina,

There will be no tax owed if you are losing money on the house. However, it is still possible that there would be withholding for you since you are no longer a MD resident (your ex-husband is, so it would not apply to him). Obviously if there is no tax owed, you would get the withheld amount back, but it's going to be much easier if you address this upfront. If you can show that there is no profit, the state will generally waive the withholding requirement. You should contact the title company that will be doing the settlement - they will be able to help you prepare and submit the appropriate forms. Your Realtor should have given you this information when you listed your home.

You also might want to discuss your "status" with the title company. You might not even be subject to the withholding requirement. In either case, do this soon.

Ted Stewart, CRS, e-PRO
Yerman Witman Gaines & Conklin Realty
0 votes Thank Flag Link Sat Oct 11, 2008
Hello Tina, There are some stipulations when it comes to being an out of state owner. I would recommend that you contact the settlement company that is going to be handling this transaction and also your CPA. If you just moved there in April of 07 you may not have the tax that your agent is speaking about. One question would be is this still listed as your primary residents. Just a thought. I'm sure you will be alright in the end and congrats on the sale of your house.

Thanks
Mike
Web Reference: http://www.mikebenton.net
0 votes Thank Flag Link Fri Oct 10, 2008
Tina:
My advice is for you to get in touch with the closing attorney and get it resolved before closing.
Brett is correct below. . this could cost you a lot of money. Talk to the attorney righ away
0 votes Thank Flag Link Fri Oct 10, 2008
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