Maryland withholding when a nonresident sells a house
Why part of your proceeds may be held back at a Maryland closing if you don't live in the state, the current rates, and how to get it back.
No obligation. No pressure. Takes about 2 minutes.
The short answer
When a nonresident individual or a nonresident entity sells Maryland real estate, Maryland law says the deed can't be recorded unless income tax is withheld from the seller's net proceeds. For sales after June 30, 2025, the rate is 8.75% for individuals, estates and trusts and 8.25% for entities. It is a prepayment, not a final tax: you claim it on your Maryland return, and some sellers qualify for a full or partial exemption.
Step by step
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1
Know what it's figured on
Tax-General § 10-912 applies the rate to the total payment to the seller: the sale price minus mortgages or liens paid off at closing and the seller's other expenses on the settlement statement. The settlement agent fills out Form MW506NRS and pays it to the clerk with the deed.
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2
See if an exemption applies
The law exempts a sale where each seller certifies Maryland residency or certifies that the home is their principal residence, transfers in foreclosure or by deed in lieu, transfers by a government, and deeds showing zero consideration. Tell your settlement agent early so the right certification goes with the deed.
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3
Ask for a certificate early
If you expect little or no tax on the gain, you can apply to the Comptroller on Form MW506AE for a certificate of full or partial exemption. The Comptroller says the form and documents must be received no later than 21 days before closing.
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4
Get the money back if too much was held
The withholding is credited to you on your Maryland income tax return for the year of the sale. For 2026 closings, Form MW506R can request an early refund 60 days or more after closing, but not for a sale of $1,500,000 or more, not for a closing on or after October 1, 2026, and not after December 1, 2026.
Sources: Maryland Code, Tax-General § 10-912 · Comptroller of Maryland, Tax Alert: Rate Change to Withholding on Sale of Real Property by a Nonresident (April 13, 2026) · Comptroller of Maryland, 2026 Form MW506NRS · Comptroller of Maryland, 2026 Form MW506AE · Comptroller of Maryland, 2026 Form MW506R
This is general information, not tax or legal advice. Rates and form deadlines change each year; confirm with your settlement agent, a tax professional or the Comptroller of Maryland (1-800-638-2937).
Cash offer vs listing
Example: a $250,000 home
| Offer | $205,000 |
|---|---|
| Repairs | $0 |
| Commissions | $0 |
| Closing costs | $0 |
| You walk away with | $205,000 |
| In 7 to 14 days | |
| Sale price | $250,000 |
|---|---|
| Repairs | about $8,000 |
| Commissions | about $13,800 |
| Closing and holding | about $6,000 |
| You walk away with | about $222,200 |
| In 60 to 90 days | |
Example only. Your numbers depend on your home and market.
Withholding affects the cash you walk away with at closing either way, so we can show the cash offer next to what listing could net with it in view.
Frequently asked questions
How much does Maryland withhold from a nonresident seller?
For sales after June 30, 2025, it is 8.75% for individuals, estates and trusts and 8.25% for entities, applied to the net proceeds after mortgage payoffs and your settlement expenses.
Is the withholding the tax I actually owe?
No. It is a payment toward your Maryland income tax. You report the sale on a Maryland return and get a refund if more was withheld than you owe.
Can I avoid the withholding?
Some sellers can. The law exempts Maryland residents and sellers who certify the home is their principal residence, among others, and the Comptroller can issue a certificate of full or partial exemption if Form MW506AE is received at least 21 days before closing.
Who are you?
We are real estate investors based in Baltimore, helping homeowners since 2016. We buy houses directly for cash. We are not a licensed real estate brokerage and do not list homes ourselves; if listing could get you more, we show you the math so you can choose.