Is Your Seller a Maryland Resident?
Being wonderfully busy with new listings, this question needs to be addressed. Is Your Seller a Maryland Resident?
Tax Alert-- Change in Maryland Withholding Tax
Effective
June 1, 2012, the Maryland tax rate applicable to withholding on a sale
or transfer of real property by a non resident of the state, will
increase 7%
Since I am not an attorney or an accountant, I let a professional, like Jeff Margolies , answer in the form of this newsletter.
Newsletter
Effective June 1, 2012,
the Maryland tax rate applicable to withholding on a sale or transfer of
real property by a nonresident individual will increase, as follows:
Ø Nonresident Individuals - 7.00 percent
Ø Nonresident Entities - 8.25 percent (remains the same)
Some
of you have asked me what constitutes a Resident. Below is the most
common question that I have been receiving, and my answer:
Question: I have customers that recently moved from Maryland
and currently live out-of- state. They are selling their former home.
Since they no longer live in the State of Maryland, do they have to pay withholding taxes?
Answer: Certain transfers are exempt from the payment of Maryland
withholding taxes. One of them is the sale of a principal residence.
The Office of the Comptroller regulations define principal residence as
described in the Internal Revenue Code (26 U.S.C. §121) and listed as a principal residence with the State of Maryland.
According to the IRS, if the real estate was used as the seller(s)
primary residence for at least two years (2) during the five year (5)
period ending with the date of the sale, then the gain from the sale is
exempt from being included in gross income. Currently that amount is
$250,000.00 for individuals and $500,000.00 for married couples filing a
joint return.
According
to MD TAX-GENERAL Code Ann. § 10-912, in order to obtain the exemption
in Maryland, the transferor(s) must sign a certification under penalties
of perjury that the property being transferred is their principal
residence. The certification must be recorded together with the
instrument transferring the property.
§ 10-912 (d) Exceptions.- Subsection (c) of this section does not apply when:
(5)
a certification under penalties of perjury that the property being
transferred is the transferor's principal residence is provided by each
transferor in:
(i)
the recitals or the acknowledgment of the deed or other instrument of
writing transferring the property to the transferee; or
(ii)
an affidavit signed by the transferor or by an agent of the transferor
that accompanies and is recorded with the deed or other instrument of
writing transferring the property;
At Supreme
Title Company, this is accomplished by having the sellers sign the form
entitled “Certificate of Exemption from Withholding-MD”, which is then
recorded with the Deed.
Please remember…
Each tax situation is unique. Since Supreme Title Company cannot give legal or tax advice, customers should consult with a tax professional before moving forward.
Jeffrey E. Margolies, Esq.
Is Your Seller a Maryland Resident?
Being wonderfully busy with new listings, this question needs to be addressed. Is Your Seller a Maryland Resident?
Labels: Jeff Margolies, Maryland Tax, Maryland Withholding tax, Supreme Title Co.
