Form Mw506Ae – Fill Out and Use This PDF

The Maryland Form MW506AE is an application used for claiming a full or partial exemption from the withholding requirements applicable to the sale of real or associated personal property in Maryland by nonresident individuals and entities. It necessitates submission at least 21 days before the property closing date, accompanied by relevant documentation to calculate the exemption amount. For those involved in such a transaction, it's crucial to accurately complete and timely submit this form to potentially reduce or eliminate withholding obligations.

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Form Mw506Ae PDF Details

The Maryland Form MW506AE, Application for Certificate of Full or Partial Exemption, serves a critical role for nonresident individuals and entities involved in the sale of real property or associated personal property within the state of Maryland. This form, required for transactions aiming to obtain full or partial exemption from the mandatory withholding requirements, must be meticulously completed and submitted to the Comptroller of Maryland at least 21 days before the property's closing date. Applicants are required to include detailed property information, including its use, ownership details, financial figures regarding the purchase price, capital improvements, settlement expenses, and a calculation of the tentative exemption based on these values. Importantly, the form also addresses special situations such as principal residence considerations, installment sales, and tax-free exchanges that may affect the exemption status. Ensuring accuracy and completeness, including the attachment of necessary documentation as specified in the instructions (e.g., settlement statements, proof of improvements, etc.), is paramount. Any claims made on the form are subject to verification, and the Comptroller's decision regarding the issuance of a full or partial exemption is final and not open to appeal. Thus, understanding and correctly navigating the specifics of the MW506AE form is essential for nonresident sellers to comply with Maryland's tax laws and potentially reduce their financial liability in the course of a real estate transaction.

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MARYLAND

FORM

MW506AE

2021

Application for Certificate of

Full or Partial Exemption

For the sale of real property or associated personal property

in Maryland by nonresident individuals and entities.

DO NOT WRITE OR STAPLE

IN THIS SPACE

The form and required documents MUST BE RECEIVED no later than 21 days before closing date.

Social Security Number		Spouse's Social Security Number

Your First Name	MI	Last Name

Spouse's First Name	MI	Last Name

Name (Corporation, Partnership, Trust, Estate, etc.)

T/A or C/O or Fiduciary			Federal Employer Identification Number

Present Address (No. and street)

City or Town		State	ZIP code

Transferor/Seller’s Entity Type:		Ownership Percentage
Individual/ Estate/ Trust	Business	________________________%

Property Information

Description of Property (Include street address, county, or district,	Was the property ever used as a rental or commercial property?
subdistrict and lot numbers if no address is available.)	(Note: Income tax returns are required in most circumstances - see instructions.)
	Yes	No
	Dates used as a rental/commercial property (mm/dd/yyyy):
	FROM________________ TO__________________

	Date of Closing (mm/dd/2021)
	(REQUIRED)

Calculation of Tentative Exemption - Required

(The certificate of exemption will be calculated based on actual documents received & amounts substantiated. The Comptroller’s decision to issue or deny a full or partial exemption and the amount is final and not subject to appeal.) See instructions for more details on required documentation.

1.	Purchase price/Inherited value. (Attach a copy of the settlement statement
	or Death Certificate and appraisal.)	對	1._____________
2.	Capital Improvements. (Optional. Will not be credited unless properly documented.
	Attach paid invoices or receipts with cancelled checks for improvements.)		2._____________

3.Settlement expenses.

a. Original purchase (Attach settlement statement) . . . .

	b. Pending sale (Attach preliminary closing disclosure) . . .		Add lines 3a. and 3b.	3._____________
4.	Add (Lines 1 through 3)	. . . . 對		. 4._____________
5.	Depreciation deducted for rental activity on federal return.. .	. . . . . . . . . . . . . . . . 對		. 5._____________
6.	Subtract (Line 5 from Line 4). This is your adjusted basis. . . . . . . . . . . . . . . . . . 對			6._____________
7.	Contract sales price. (Attach contract [1st page and signature pages] or preliminary
	settlement statement.)	. . . . 對		7._____________
8a.	Subtract (Line 6 from Line 7). This is the amount subject to tax			8a._____________
8b.	Multiply Line 8a by ownership percentage (1.00, .50, .333, etc.)			8b._____________

9.Tax Rate. Check box for applicable tax rate.

a. Individual 8.0% (.080)

b.	Business 8.25% (.0825)
10. Tentative withholding amount. Multiply line 8b by applicable tax rate.
	If Line 8 is zero (0) or less than zero (0), enter zero (0)	對 .	10._____________

NOTE: This amount will be recalculated by the Comptroller’s Office based on the actual documentation received and amounts substantiated.

21-49

MARYLAND	Application for Certificate of Full or Partial Exemption		2021

FORM			page 2
MW506AE

Transferor/Seller’s Name_______________________________________________________		Your Social Security Number/FEIN______________________________

Special Situations

Check the box in the “Special Situations” column that applies to your situation, if any. If none apply, your exemption will be based only on the amount on the worksheet on page 1. See instructions for required documentation.

Principal Residence.	Transfer is pursuant to an installment sale under §453 of
	the Internal Revenue Code.

Principal Residence – Active-duty Military, Certain	Transfer of inherited property is occurring within 6 months
Government Employees.	of date of death.

Tax-Free Exchange for purposes of §1031 of the Internal	Transferor/seller is the custodian of an individual retirement
Revenue Code.	account (IRA).

Transferor/seller is receiving zero proceeds from this	Transfer is pursuant to a specific Internal Revenue Code
transaction because proceeds are going to another seller/	section. See addendum.
owner (ex. cosignor).

Address of Settlement Agent to Mail Certificate if Issued (See instructions.)

Name of contact person and company

Street Address		City	State	ZIP code

Telephone number	Fax number		Email Address

Under the penalties of perjury, I declare that I have examined this application, including any schedules or statements attached, and to the best of my knowledge and belief, it is true, correct and complete. If prepared by a person other than taxpayer, the declaration is based on all information of which the preparer has any knowledge.

Your signature	Date
Spouse’s signature	Date
Telephone number

Check here	if you authorize
us to contact you by email.		Email address

Preparer’s PTIN (required by law)

Signature of preparer other than taxpayer

Printed name of preparer

Address of preparer

Telephone number of preparer

21-49

MARYLAND

FORM

MW506AE

INSTRUCTIONS FOR APPLICATION FOR	2021
CERTIFICATE OF FULL OR PARTIAL EXEMPTION

The Comptroller’s decision to issue or deny a certificate and the amount of

tax is final and not subject to appeal.

GENERAL INSTRUCTIONS

Purpose of Form

Use Form MW506AE to apply for a Certificate of Full or Partial Exemption from the withholding requirements on the proceeds of the sale of real property and associated personal property in Maryland by nonresident individuals and nonresident entities. A nonresident entity is defined to mean an entity that: (1) is not formed under the laws of Maryland and (2) is not qualified by or registered with the Department of Assessments and Taxation to do business in Maryland.

Who May File an Application

An individual, fiduciary, C corporation, S corporation, limited liability company, or partnership transferor/seller may file Form MW506AE. Unless the transferors/sellers are spouses filing a joint Maryland income tax return, a separate Form MW506AE is required for each transferor/seller.

IMPORTANT: The completed Form MW506AE and all required documentation must be received by the Comptroller of Maryland no later than 21 days before the closing date of the sale or transfer to ensure timely receipt of a Certificate of Full or Partial Exemption. Applications with no closing date will not be processed.

The Comptroller’s decision to issue or deny a Certificate of Full or Partial Exemption and the determination of the amount of tax to be withheld if a partial exemption is granted are final and not subject to appeal.

SPECIFIC INSTRUCTIONS Transferor/Seller’s Information

Enter the name, address and identification number (Social Security number or federal employer identification number) of the transferor/seller applying for the exemption. If the transferor/seller was issued an individual taxpayer identification number (ITIN) by the IRS, enter the ITIN.

Check the box indicating the transferor/seller’s entity type.

Enter the transferor/seller’s ownership percentage of the property. For example, if there are four equal owners, enter 25% for single application.

Property Information

Enter the description of the property, including the street address(es) for the property as listed with the State Department of Assessments and Taxation (SDAT), including county. If the property does not have a street address, provide the full property account ID numbers used by SDAT to identify the property.

Enter the date of closing for the sale or transfer of the property.

Application will not be processed if left blank.

Enter the property account ID number, if known. If the property is made up of more than one parcel and has more than one property tax account number, include all applicable property account ID numbers.

Check the box to indicate whether the property was used for rental/commercial purposes. Maryland law requires that nonresidents owning real property in Maryland file a nonresident income tax return reporting any rental income or loss. If you checked the rental/commercial box and did not file returns reporting this income or loss, your application will be denied. File all appropriate returns before filing this application.

Relocating Sellers

If you are selling your house through a relocation company, please see the MW506AE – Relo Addendum for further instructions. You must complete the MW506AE – Relo Addendum and attach

it to your submission of the MW506AE.

Calculation of Tentative Exemption/Withholding Amount

Complete the calculation of tentative exemption section.

Line 1. Enter the purchase price of the property. This is the contract amount for the original purchase. DO NOT include settlement costs or other adjustments in this line. If inherited property, use the Date of Death value of the property. You must attach an original settlement statement, property tax printout (available at www.dat. state.md.us), original contract, date of death appraisal, or other proof of original purchase price or inherited value.

Line 2. Enter amount of capital improvements. This line is OPTIONAL. However, you must attach paid invoices or receipts with cancelled checks for improvements. Documentation must include proof of payment, address of property, and work completed.

Line 3. Settlement costs. You must attach a settlement statement for this amount. You may add both settlement costs for purchase and sale of the property if you have a settlement statement for each. If a preliminary settlement statement is not available at time of filing, you must forward as soon as completed in order to be credited for these costs. You may request this from the settlement agent.

Line 4. Add lines 1 through 3.

Line 5. Depreciation. Enter all depreciation already taken for this property, if rental or commercial, on any income tax return. You must attach a depreciation schedule or returns.

Line 6. Adjusted basis. Subtract line 5 from line 4. This is your adjusted basis.

Line 7. Contract Sales Price. Enter contract sales price. You must attach current contract (page 1 and signature pages only) or preliminary settlement statement.

Line 8a. Amount subject to tax. Subtract line 6 from line 7.

Line 8b. Multiply Line 8a by percentage of ownership. Line 9. Tax Rate. Select which tax rate applies.

Line 10. Tentative Withholding Amount. Multiply line 8b by the tax rate. This is the tentative amount of withholding. If zero or less than zero, enter zero. If zero, you may qualify for a full exemption (subject to verification).

Note: This amount will be calculated by the Comptroller’s Office based on actual documentation received.

Special Situations

Principal Residence.

Transfer is of your principal residence as defined in §121 of the Internal Revenue Code, which means it has been your principal residence for two of the last five years. Resident income tax returns for that period must have been filed to claim principal residence. This will be verified by the Comptroller’s Office.

Principal Residence – Active-duty Military, Certain Government Employees.

Transfer is of your principal residence as defined in §121 of the Internal Revenue Code, if you had a move necessitated by government orders or are stationed in Maryland. Attach transfer orders and proof of residency. This may include federal income tax return with Maryland address, utility bills, property tax statements, etc. See Internal Revenue Service Publication 523.

MARYLAND

FORM

MW506AE

INSTRUCTIONS FOR APPLICATION FOR	2021
CERTIFICATE OF FULL OR PARTIAL EXEMPTION

The Comptroller’s decision to issue or deny a certificate and the amount of

tax is final and not subject to appeal.

Tax-Free Exchange for purposes of §1031 of the Internal Revenue Code.

Required documentation in addition to that on page 1; letter signed by the qualified intermediary, or by the person authorized to sign on behalf of a business entity acting as the qualified intermediary, which states the name(s) of the transferor(s), the property description, that the individual or business will be acting as the qualified intermediary for the transferor(s) as part of a §1031 exchange of the property, whether there will be any boot, and if so, the amount of boot. The amount of any boot must be stated on the application as the taxable amount.

Transferor/seller is receiving zero proceeds from this transaction.

Note: This situation applies when all proceeds go to another seller/co-owner. This does not apply if you receive ANY proceeds.

Required documentation in addition to that on page 1; copy of a letter from the transferor/seller to the title company advising they are to receive zero proceeds from the sale and advising to whom the proceeds are to go; a copy of the acknowledgment letter from the title company to the transferor/seller that all proceeds are to go to another seller/co-owner.

Transfer is pursuant to an installment sale under §453 of the Internal Revenue Code.

Required documentation in addition to that on page 1; copy of contract of sale or copy of settlement sheet from the title company; copy of promissory note to transferor which will be executed by transferee at settlement. That portion of the total payment that the transferor receives at or within sixty (60) days of settlement must be stated on the application as the taxable amount.

Transfer of inherited property is occurring within 6 months of date of death.

Required documentation in addition to that on page 1; provide a copy of the death certificate and a copy of the estimated settlement sheet from the title company.

Transferor/seller is the custodian of an individual retirement account.

Required documentation in addition to that on page 1; provide a copy of the preliminary settlement sheet from the title company, the custodian’s Certificate of Good Standing from its state of incorporation, and a letter from the title company stating that all proceeds will be disbursed to the custodian.

Transfer is pursuant to a specific Internal Revenue Code section. See addendum.

Address to Mail Certificate if Issued

Provide the name and address of the title company or settlement agent to whom we should mail the exemption certificate if issued. If you do not know the identity of the title company or settlement agent at the time you complete this form, you must email the name and address to nrshelp@marylandtaxes.gov as soon as possible. You must provide a mailing address to avoid delay in recording the sale.

Signature(s)

Form MW506AE must be signed by an individual (both taxpayer and spouse, if filing a joint Maryland income tax return), or a responsible corporate officer.

Include a daytime telephone number where you can be reached between 8:00 AM and 5:00 PM.

If you would like to be contacted by email in the event that more information is needed to process your application, include your email address and check the box allowing us to contact you by email. The exemption certificate, if issued, will not be emailed to you.

Your signature(s) signifies that your application, including all attachments, is, to the best of your knowledge and belief, true, correct and complete, under penalties of perjury.

If a power of attorney is necessary, complete Maryland Form 548 and attach to your application.

Where to File

Mail the completed form and all attachments to:

Comptroller of Maryland

Revenue Administration Division

Attn: NRS Exemption Requests

P.O. Box 2031

Annapolis, MD 21404-2031

Email the completed form and all attachments to nrshelp@ marylandtaxes.gov

Note: The email submission will not expedite the processing of your application. If you are emailing large attachments, send multiple smaller emails.

Submit your application via only one method.

Additional Information

For additional information visit www.marylandtaxes.gov, email nrshelp@marylandtaxes.gov or call 1-800-MDTAXES (1-800-638-2937) or 410-260-7980 in Central Maryland.

21-49

MARYLAND						2021
MARYLAND
FORM				ADDENDUM FOR APPLICATION FOR
MW506AE			CERTIFICATE OF FULL OR PARTIAL EXEMPTION

Code Letter	IRC Section	Description			Required Documentation

a	§ 351	Transfer is to a corporation			Copy of the agreement of sale; Certificate of Good Standing of
		controlled by the transferor			transferee issued by the state in which transferee is incorporated;
		for purposes of § 351 of the			notarized affidavit executed on behalf of transferee by its President
		Internal Revenue Code.			and its Treasurer stating that immediately after the exchange the
					transferor(s) will own stock in the transferee possessing at least eighty
					percent (80%) of the total combined voting power of all classes of
					transferee’s stock entitled to vote and at least eighty percent (80%)
					of the total number of shares of all other classes of stock of the
					transferee; and an appraisal establishing the fair market value, at
					the time of the exchange, of any property other than stock in the
					transferee which is part of the consideration for the exchange. The
					fair market value of any such other property and/or any money which
					is part of the consideration for the exchange must be stated on the
					application as the taxable amount.

b	§ 361	Transfer	is	pursuant to a	Copy of agreement governing the transfer between transferor and
		tax-free reorganization as			transferee; Certificates of Good Standing of transferor and transferee
		described in § 361 of the			issued by the state(s) in which transferor and transferee are
		Internal Revenue Code.			incorporated; copy of the plan or reorganization showing that transferor
					and transferee are parties to the reorganization; and an appraisal
					establishing the fair market value, at the time of the exchange, of any
					property other than stock or securities in the transferee which is part
					of the consideration for the exchange and will not be distributed by the
					transferor in pursuance of the plan of reorganization. The fair market
					value of any such other property and/or any money which is part of
					the consideration for the exchange must be stated on the application
					as the taxable amount.

c	§ 501(a)	Transfer is by a tax-exempt			Copy of determination by the Internal Revenue Service that transferor
		entity for purposes of § 501(a)			is a tax-exempt entity for purpose of § 501(a) of the Internal Revenue
		of the Internal Revenue Code			Code; Certificate of Good Standing of transferor issued by the state
		and transfer involves limited or			in which transferor is incorporated; notarized affidavit executed on
		no unrelated business taxable			behalf of transferor by its President and by its Treasurer stating that
		income under § 512 of the			the transfer involves limited or no unrelated business income under §
		Internal Revenue Code.			512 of the Internal Revenue Code.

d	§ 721	Transfer is to a partnership in			Copy of agreement governing transfer between transferor and
		exchange for an interest in the			transferee; copy of the partnership agreement of the transferee.
		partnership such that no gain
		or loss is recognized under §
		721 of the Internal Revenue
		Code.

e	§ 731	Transfer is by a partnership to			Copy of agreement governing transfer between transferor and
		a partner of the partnership in			transferee; copy of the partnership agreement of the transferor.
		accordance with § 731 of the
		Internal Revenue Code.

f	§ 857	Transfer is treated as a transfer			Copy of agreement governing transfer between transferor and
		by a real estate investment			transferee; certified copy of Articles of Incorporation of transferor;
		trust for purposes of § 857 of			Certificate of Good Standing of transferor issued by the state in which
		the Internal Revenue Code.			transferor is incorporated.
g	§ 1033	Transfer is pursuant to a			Copy of agreement governing transfer between transferor and
		condemnation and conversion			government body or authority condemning the property; notarized
		into a similar property for			affidavit executed by transferor stating that transferor will identify
		purposes of § 1033 of the			and purchase replacement property within the time limits required
		Internal Revenue Code.			by § 1033 of the Internal Revenue Code, or copy of contract of sale
					if transferor has already identified replacement property. If proceeds
					from condemnation exceed price of replacement property, the excess
					must be stated on the application as the taxable amount.

h	§ 1041	Transfer	is	between spouses	Copy of marriage license or divorce decree; copy of deed which will
		or incident to divorce for			be recorded to accomplish the transfer; if incident to divorce, copy of
		purposes of § 1041 of the			section of court order or separation agreement governing transfer of
		Internal Revenue Code.			the property.
i	§ 1368	Transfer is treated as a			Copy of agreement governing transfer between transferor and
		transfer by an S corporation			transferee; copy of approval by the Internal Revenue Service of
		for purposes of § 1368 of the			transferor’s S-corporation election; Certificate of Good Standing of
		Internal Revenue Code.			transferor issued by the state in which transferor is incorporated.

21-49

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Fill out the The certificate of exemption will, Purchase priceInherited value, or Death Certificate and appraisal, Capital Improvements Optional, Attach paid invoices or receipts, Settlement expenses, a Original purchase Attach, b Pending sale Attach preliminary, Add lines a and b, Add Lines through, Depreciation deducted for rental, Subtract Line from Line This is, settlement statement, a Subtract Line from Line This, and b Multiply Line a by ownership field using the information required by the software.

maryland form full The certificate of exemption will, Purchase priceInherited value, or Death Certificate and appraisal, Capital Improvements Optional, Attach paid invoices or receipts, Settlement expenses, a Original purchase Attach, b Pending sale Attach preliminary, Add lines a and b, Add Lines through, Depreciation deducted for rental, Subtract Line from Line This is, settlement statement, a Subtract Line from Line This, and b Multiply Line a by ownership blanks to insert

In the MWAE, TransferorSellers Name, Your Social Security NumberFEIN, Check the box in the Special, Special Situations, Principal Residence, Transfer is pursuant to an, the Internal Revenue Code, Principal Residence Activeduty, Government Employees, Transfer of inherited property is, TaxFree Exchange for purposes of, Transferorseller is the custodian, Revenue Code, and account IRA segment, emphasize the necessary information.

Make sure you list the rights and responsibilities of the sides in the Address of Settlement Agent to, Name of contact person and company, Street Address, City, State, ZIP code, Telephone number, Fax number, Email Address, Under the penalties of perjury I, true correct and complete If, Your signature, Date, Preparers PTIN required by law, and Signature of preparer other than field.

Finish by taking a look at all these areas and completing them accordingly: Spouses signature, Telephone number, Date, Check here, if you authorize, us to contact you by email, Email address, Printed name of preparer, Address of preparer, and Telephone number of preparer.

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