MD Real Estate Withholding Tax

[Randall]

Anyone familiar with Maryland real estate sales withholding tax? Client is a nonresident of MD, inherited property in MD, tax basis $850,000. Ready to close on sale for about $917,000. They are going to withhold 7.5% of sales price, about $69,000.

[Richcpaman]

Randall:

That is what they do.

Then you file the form MD505 and claim the refund for the taxes paid, less the amount that was due.

They should only withhold 2.5% of the sales price also.

If the inheritated property was recently, sometimes the attorneys will let you withhold less. But the law in the peoples state of MD is pretty clear. Mo' money

Rich

[ed_accountant]

States have this withholding tax to force nonresidents to file the appropriate income tax returns. Your client can file the MD State tax return and report the sale of the real estate and depending on the gain or loss request a refund..

[Randall]

Richcpaman, where are you getting the 2.5%? My client is saying they are going to withhold 7.5%.