Maryland non-resident seller Withholding Tax: Update

By February 2, 2011 Uncategorized
* Editor’s Note: As of 2016 the amount of tax required to be withheld is 7.5 percent of the “total payment” to a nonresident individual and 8.25 percent to a nonresident entity. For the most up-to-date information regarding Maryland withholding requirements, visit the Maryland comptroller website.

Believe it or not, sometimes tax rates actually go down! Effective January 1, 2011, the rate of withholding taxes to be withheld and paid to the Clerk of the Court on the sale of real estate by non-residents in the state of Maryland has been lowered from 7.5% to 6.75%.

The rate of withholding for non-Maryland entities has remained unchanged at 8.25%.

Maryland residents and Maryland entities (entities formed in Maryland and/or which have qualified or registered to do business in Maryland) are exempt from the withholding requirement.

Also exempt from the withholding requirement are non-resident sellers who used the property as their principal residence as defined in IRC 121 and had the property recorded as such with the State Department of Assessments and Taxation.

Here is a detailed guide on the Maryland non-resident seller withholding tax.

Editor’s note: State legislators voted to raise the withholding for nonresident individual sellers from 6.75% to 7% effective June 1, 2012. The rate of 8.25% for nonresident entity sellers remains unchanged.

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