When selling real estate property in Maryland, the state requires the withholding of income tax on sales of nonresidents. The withholding serves as an estimated tax payment toward the seller's potential tax liability in Maryland.
Form MW506NRS is designed to assure the regular and timely collection of Maryland income tax due from nonresident sellers of real property located within the State. This form is used to determine the amount of income tax withholding due on the sale of property and provide for its collection at the time of the sale or transfer.
If the transferor/seller is a nonresident individual or entity and is transferring an interest in real property located within the State of Maryland, unless the transaction is otherwise exempt from the income tax withholding requirement, the person responsible for closing must file Form MW506NRS wit the deed or other instruments of transfer that will be filed with the Clerk of the Circuit Court for recordation.
As a nonresident, you must file a Maryland nonresident income tax return for the year in which you sold the property. This return will reflect the sale of your property and the tax withheld. If the amount withheld is more than your tax liability for the sale, you would receive a refund.
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