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Maryland Real Estate: Non-Resident Seller Withholding Tax – Here’s What You Need to Know

Ryan Haley, owner and broker of Atlantic Shores Sotheby’s International Realty, talks about withholding tax for non-residents of Maryland. 

If you are a non-resident of Maryland and you are selling a property at the beach or anywhere else in Maryland, you will be subject to 8% non-resident withholding tax. 

Essentially put in place to account for the capital gains tax from the state’s side. 

The tax will be withheld from the total payment at the time of settlement. The total payment is calculated by taking the sales price when you sell minus any commissions, transfer taxes, debts owed on the property. The result is multiplied by 8%, which will be withheld by the State of Maryland until you file your Maryland tax return. 

What is not taken into consideration is your actual basis for the property or what you actually paid for the property. But as long as you have 21 days from the date of contract acceptance until you close, you can work with the comptroller’s office to not just have an estimated withholding number but actually calculate an exact figure that you may owe if there is actually a capital gain on the property. When you do this, the comptroller’s office will calculate and look at your basis for the property and consider whether you depreciated it over the years to come up with the tax liability. 

Some people think that this is an exit tax and a way to go after the non-residents, but that is truly not the case. It is simply just the State of Maryland securing its portion of the state capital gains tax. 

If you need further help with your unique situation when selling your property, it is always best to consult your accountant or tax attorney. 

Should you have any questions about selling or buying at the beach or in Maryland and Delaware, please connect with us at 410.524.0919, and we will be happy to help you out. 

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