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Non-Resident Owners of Maryland Property - Transfer Tax (Withholding) Rate Increase "Again"

Military people and others who own property in Maryland but who have residency in another state . . They did it again! Effective July 1st, 2008, the non-resident "withholding tax" for individuals is increasing again. This time, it's going from 6.75% to 7.5%. This is on top of the state and county transfer taxes. If you sell property in Maryland and you are a non-resident owner your gain on the sale will be subject to the tax. If you sell real estate that's titled in your non-resident business' name the withholding tax is 8.25%. Wow! You can complain to Maryland legislators but it doesn't seem to matter. Just about every tax in Maryland has increased in the past year.

Posted by Mickey Hayward - Farms, Land, Homes MD and DE on 06/11/2008 01:06 PM

Comments (11)

real estate nonresident transfer withholding taxes maryland

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11 Comments on Non-Resident Owners of Maryland Property - Transfer Tax (Withholding) Rate Increase "Again"

JUN

2008

Wait, let me guess. Maryland is run by liberals. How did I know?

Kevin - How did you guess so quickly? Hmmm

I used to live in Cantaffordya. Same type of thinking. Scary. We were actually thinking of buying a home for vacation use along the bay. How will that effect me?

It won't effect you until you decide to sell. Maryland is a very beautiful state with much to offer. It's just a shame that their taxes keep going up.

The income tax is 6% for residents and 1.25% for non-residents.
The sales tax is 6%
This tax on the gain of real estate at 7.5% can only be described as confiscatory.

No matter. For military who by and are reasigned within 3 years, there will be no "gain".

A military person would have to have some very bad advice to buy real estate until prices stop falling. They won't be able to pay the cost of sale and pay the mortgagee.

Amen Lenn. You said it well ! How does Virginia rate with taxes?

JUN

2008

No one here knows what they are talking about when it comes to MD income taxes! If you work in MD and are a resident of a state with a reciprocal agreement you do not pay any income tax in MD. If you are like me and live in DE you get screwed royally because MD will make you pay the HIGHEST STATE RATE no matter what you make (5.5%) plus a non resident tax of 1.25%. That totals 6.75%. If I lived in MD I would have to make $500,000 to be in that tax bracket! I make a measely $48k. That is ridiculous. I realize I will not owe Delaware because they will credit me for what I pay in MD, but the fact that I have to pay the rate that someone making half a MILLION dollars makes is absolutely ridiculous.

How do you gouys put up with such liberal nonsense? Is your state overrun with them?

Terry - Like you, I too pay the big taxes since I am a Delaware resident who works in Maryland. Kevin - You are right. It's such nonsense. How this is supposed to help an econony is beyond me. I have a friend who buys lots of properties, holds them, and then resells them a couple of years later. He used to buy Maryland farms. Not any more though . . . The transfer and withholding taxes are making it too cost prohibitive for him to make a profit. Of course if you are a far left liberal you wouldn't want anyone making a profit anyway . . . unless they are going to share it with everyone.

AUG

2008

Does this tax apply only to the actual cash you take away from the settlement? In other words, does it apply to the money you pay off the mortgage with and how about if you do a 1031 exchange?

AUG

2008

Here is a link to the Maryland website that explains this tax along with supporting documentation about how to compute it. The tax is paid on the net sales price, less selling expenses and debt (mortgages and liens on the property). From what I have found, 1031 exchanges are not exempt. I may be wrong. Check with the state of Maryland Comptroller's Office or your accountant or title attorney to verify this since the tax savings can be huge if 1031s are exempt.

http://individuals.marylandtaxes.com/estatetax/withholding.asp

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