Recently, we attended a meeting with a representative from the Maryland Comptroller’s office who spoke about the Maryland non-resident withholding tax. This is a tax that is charged to sellers at the time of settlement, who are not residents of Maryland. The tax is pretty high too – 7% of the seller’s net proceeds goes to the Maryland Comptroller.
The law that created this tax went into effect on October of 2003, but to this day, many non-resident sellers in Maryland are unaware of the 7% tax until they get to the settlement table and find that their proceeds are 7% less than they had planned.
If you are selling your property in Maryland and you do not live in Maryland, you might consider completing an application for an exemption to this tax. It is worth a shot and you may find that you are partially or fully exempt from paying it. The application should be filled out and submitted (with all supporting documentation) once you go under contract, no later than 21 days before the settlement date. You can still submit it after the 21 day period, however, there is a chance that they will not have time to process your application. The application can be found here.
If you have already settled on a property and you did not receive an exemption certificate (and it is before the end of the year during which the property was sold), you can fill out this application and apply for a refund. There is no guarantee that you'll receive a refund, but it is worth a shot! It must be submitted before December 1, 2014 and may not be submitted sooner than 60 days after closing. If your closing occurs after October 1, 2014, you are not eligible to file this form.
For additional questions or concerns, you can contact NRS Processing – Legal Section for the Comptroller of Maryland at 410-260-6153 or by email at nrshelp@comp.state.md.us
