Form Mw506Ae – Fill Out and Use This PDF

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

Printed name of preparer

Address of preparer

Telephone number of preparer

MARYLAND

FORM

MW506AE

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

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

OR

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.