How much is typically withheld from a non-resident seller's net proceeds in Maryland?

In Maryland, when a non-resident seller of real estate completes a transaction, the state requires a certain percentage of the sale proceeds to be withheld for tax purposes. The correct withholding amount is 7.5% of the seller's net proceeds. This withholding acts as a safeguard for the state, ensuring that non-resident sellers pay the appropriate state income taxes on income earned from property sales within Maryland.

The withholding amount helps the state to collect taxes effectively from sellers who may not be subject to the same tax filing requirements or may not have a physical presence in Maryland. This percentage is specifically designed to reduce the risk of non-payment of taxes by non-resident sellers.

This requirement is part of broader tax compliance measures implemented by states to ensure that all transactions involving real property are taxed appropriately, regardless of the residency status of the seller. Understanding this withholding percentage is crucial for those involved in real estate transactions in Maryland, particularly for non-resident sellers.