Selling Your Ocean City Home as a Non-Resident? Maryland Withholds 8.75% at Closing. Here's How to Hold Most of It Back.
The state takes it from your proceeds at the settlement table. One form, received 21 days before closing, changes what it takes it on.
Maryland takes it at closing. Most sellers find out late.
Maryland has required withholding on non-resident sellers since October 1, 2003. The settlement agent deducts it from your proceeds at closing and sends it to the Comptroller of Maryland. For sales after June 30, 2025, the rates are:
| Seller type | Rate |
|---|---|
| Non-resident individuals, estates, and trusts | 8.75% |
| Non-resident business entities (LLCs, corporations, partnerships, S-corps) | 8.25% |
Non-resident means your permanent residence is outside Maryland. Pennsylvania, New Jersey, Virginia, Delaware, New York, Florida. All of them count. Trusts are grouped with individuals at 8.75%, not with entities.
The rate applies to the total payment. That is the sale price minus mortgage payoffs and your selling costs on the settlement statement. Prorations and rent handovers do not reduce it.
It is a lot of cash held back. It is not always the tax you owe. The base is the whole payment, not your profit.
File Form MW506AE. The Comptroller must receive it 21 days before closing.
MW506AE is the Application for Certificate of Full or Partial Exemption. You file it with the Comptroller of Maryland. If approved, withholding is figured on your taxable gain instead of the full payment.
Taxable gain is the sale price minus your adjusted basis. Adjusted basis is your original purchase price, plus capital improvements and settlement costs, minus depreciation recapture.
8.75% of a $400,000 sale.
8.75% of $110,000 in gain ($400,000 sale, $290,000 adjusted basis).
A $25,375 difference in what is held at closing.
Simplified example. It treats the full $400,000 as the base. A mortgage payoff or selling costs on your settlement statement would lower the no-exemption figure. Your tax adviser should run your real numbers.
The 21 days are firm. No exceptions. The clock runs to when the Comptroller receives it, not when you send it. Start when you have a signed contract.
If you rented the property, read this. If it was rented and you never filed Maryland non-resident income tax returns, the application is likely to be denied. Talk to your accountant or CPA before you file.
Get your free market analysis and 21-day timeline
Three fields. I'll send a price range for your property and the date your MW506AE needs to be in.
Required documents for MW506AE
Gather these before you file. Missing paperwork is what eats the 21 days.
- Your original settlement statement from when you bought, or proof of inheritance if you inherited the property
- Receipts for capital improvements
- The settlement statement for the pending sale
- The sales contract
- Depreciation records, if the property was a rental or used for business
- Property account information
- Extras for special situations, such as trust, estate, or entity documents
Get the Maryland Non-Resident Seller Checklist (PDF)
Enter your email and I'll send it to you.
Send it one way. Not both.
By mail:
Comptroller of MarylandRevenue Administration Division
Attn: NRS Exemption Requests
P.O. Box 2031
Annapolis, MD 21404-2031
Or by email: nrshelp@marylandtaxes.gov
Use one method only. Email does not expedite review. The 21-day rule still applies.
Entities are withheld at 8.25%. The same form applies.
Non-resident business entities are withheld at 8.25% of the total payment. MW506AE still applies. The Comptroller must still receive it at least 21 days before closing.
Questions sellers ask
What is Maryland's withholding rate for non-resident sellers?
Maryland has required withholding on non-resident sellers since October 1, 2003. For sales after June 30, 2025, it is 8.75% of the total payment for non-resident individuals, estates and trusts, and 8.25% for non-resident business entities such as LLCs, corporations, partnerships and S-corps. The settlement agent deducts it from your proceeds at closing and sends it to the Comptroller of Maryland.
What is Form MW506AE?
It is the Application for Certificate of Full or Partial Exemption. If the Comptroller of Maryland approves it, withholding is calculated on your taxable gain instead of the full payment. Taxable gain is the sale price minus your adjusted basis: original purchase price plus capital improvements and settlement costs, minus depreciation recapture.
What is the deadline to file Form MW506AE?
The Comptroller of Maryland must receive it at least 21 days before closing. There are no exceptions. Start as soon as you have a signed contract.
Where do I send Form MW506AE?
Mail it to Comptroller of Maryland, Revenue Administration Division, Attn: NRS Exemption Requests, P.O. Box 2031, Annapolis, MD 21404-2031, or email it to nrshelp@marylandtaxes.gov. Use one method only. Email does not expedite review.
Does Maryland non-resident withholding apply to LLCs?
Yes. Non-resident business entities are withheld at 8.25% of the total payment. Form MW506AE still applies, and the Comptroller must receive it at least 21 days before closing. Trusts are grouped with individuals at 8.75%, not with entities.
What happens if I skip Form MW506AE?
Withholding is taken on the full total payment: the sale price minus mortgage payoffs and your selling costs on the settlement statement. On a $400,000 sale with a $290,000 adjusted basis, that is $35,000 withheld instead of about $9,625 with an approved exemption. If you rented the property and never filed Maryland non-resident returns, the application is likely to be denied, so talk to your accountant or CPA first.
Know your number before you sign a listing agreement.
I work Ocean City, West Ocean City and Ocean Pines every day. I'll price your property and lay out the 21-day timeline, so the filing date doesn't get missed.
Sources: my write-up on Maryland non-resident property owner withholding and the Comptroller of Maryland's April 13, 2026 Tax Alert.
Get your free market analysis and 21-day timeline
Three fields. I'll send a price range for your property and the date your MW506AE needs to be in.
I am a real estate agent, not an attorney or CPA. This is not tax or legal advice.
This page is general information about Maryland non-resident withholding. Rates, forms, and rules change. Your situation may differ. Confirm with the Comptroller of Maryland, your settlement agent, and a qualified tax professional before you act.