Maine Form Rew 5 PDF Details

When it comes to selling real property in Maine, nonresident sellers face specific tax withholding requirements that are both crucial and complex. The Maine REW-5 Form, officially known as the Request for Exemption or Reduction in Withholding of Maine Income Tax on the Disposition of Maine Real Property, serves as a lifeline for those looking to navigate these waters with ease. This form, overseen by Maine Revenue Services, allows sellers to apply for a reduction or even an exemption from the standard income tax withholding on the sale of real property within the state. Given the financial implications, understanding the eligibility criteria, required documentation, and timely submission of this form becomes paramount. With a standard withholding rate of 2.5% of the total consideration, the REW-5 form can significantly affect the seller’s financial responsibilities at closing. Sellers, including individuals, partnerships, corporations, and other entities, who find that the withholding amount exceeds their maximum tax liability, or believe no tax is due on their gain, must submit Form REW-5 no fewer than five business days before the closing date. Additionally, this form accommodates various ownership situations and includes specific sections for appointing a representative or Power of Attorney, underscoring the importance of accuracy, documentation, and adherence to deadlines in the real estate withholding process.

QuestionAnswer
Form NameMaine Form Rew 5
Form Length3 pages
Fillable?No
Fillable fields0
Avg. time to fill out45 sec
Other namesme rew5 online, maine tax form rew 5, maine rew, me rew5 income tax

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2021 Form REW-5

Request for Exemption or Reduction in Withholding of Maine Income Tax on the Disposition of Maine Real Property

Maine Revenue Services

Income/Estate Tax Division - REW

Tel. 207-626-8473 Fax 207-624-5062

Email: realestate.withholding@maine.gov

If possible, submit via email or fax.

P.O. Box 1060

Augusta, ME 04332-1060

Note: MRS may request additional documentation prior to authorizing an exemption or reduction in real estate tax withholding. This form must be submitted no fewer than 5 business days prior to closing. If mailed, please allow an additional 2-3 weeks for processing.

Applicant’s name (include spouse’s name, if applicable): _________________________________________________

Mailing address: ________________________________________________________________________________

SSN(s) or federal EIN:_________________________________ Daytime phone number: ______________________

Applicant’s email address : ________________________________________________________________________

Applicant’s percentage of ownership (See instructions):______________ %

1.Names of all sellers: _________________________________________________________________________

2.Buyer(s) name(s): ___________________________________________________________________________

3.Property for sale: MAP: __________ BLOCK: ____________ LOT:____________ SUB-LOT: _____________

Physical address: _______________________________ Municipality/Township:______________________

4.Date property acquired by seller: _______________

5. Method of acquisition/Proof of purchase price:

Amount: $ _________________

a)Purchase (see instructions)._____________

b)Inherited (see instructions).

Decedent’s name: ____________________ SSN:_________________ Date of death:______________

c)Gift or other (see instructions).__________________________________

6.Applicant’s allowable closing costs from original purchase of property (See instructions): $ ___________________

7.Capital improvements (see instructions): $_________________________________________________________

8.Total sales price and closing date of current pending sale: $ ________________ 8a. Date: __________________

9.Applicant’s estimated allowable current closing costs (see instructions): $ ______________

10.If rental/commercial use during ownership, length of time: Years: ________________ Months: _______________

Provide allowed or allowable accumulated depreciation. $ ____________________________________________

11.How will this sale of real property be reported on the seller’s federal income tax return? (See instructions.)

__________________________________________________________________________________________

Under penalties of perjury, I declare that I have examined this application and attached schedules and statements, and to the best of my knowledge and belief they are true, correct and complete. If you are signing on behalf of the seller(s), you must provide a written power of attorney authorization with this request. To assign a designated representative, complete the Representative Information and Power of Attorney on page 2. You must sign the authorization on page 2 or complete Form 2848-ME (available at www.maine.gov/revenue/tax-return-forms/general-forms) before MRS can speak with your designated representative. If you are signing on behalf of your employer, include authorization.

Applicant’s signature: ______________________________________________ Date: ________________________

Print name: _____________________________________________________________________________________

This request for a withholding rate reduction or exemption is submitted in accordance with 36 M.R.S. §§ 5250-A(3)(B) & (4), which authorizes the State Tax Assessor to issue a certificate of no tax due or reduction in the amount of tax to be withheld.

The rate of withholding is 2.5% of the total consideration or, at the request of the seller, the State Tax Assessor may authorize a reduced amount of withholding equal to the gain multiplied by 7.15% for individuals, 8.93% for a C corporation, in calendar year 2021.

Revised: December 2020

Representative Information (complete only if you want someone to represent you during the real estate withholding process)

Representative name (and title, if applicable)

Firm or company name

Mailing address

City, state, zip

Country (if not United States)

Email address

Telephone number

Power of Attorney (complete only if you want someone to represent you during the real estate withholding process)

By signing below, the selling party appoints the individual named in the above section to act as their representative with authority to receive confidential information and to discuss your tax records, related to this form, with Maine Revenue Services. I understand that my representative may not act on my behalf, unless I provide a Form 2848-ME, Power of Attorney. I also understand that signing this form does not revoke other power of attorney forms on file with Maine Revenue Services.

Seller signature

Print name (and title, if applicable)

Date

Additional seller signature (if applicable)

Print name (and title, if applicable)

Date

General Instructions

Purpose of Form: To request an exemption or reduction in withholding of Maine income tax on the disposition of Maine real property.

Who may File: A seller (individual, firm, partnership, association, society, club, corporation, estate, trust, business trust, receiver, assignee or any other group or combination acting as a unit) of Maine real property who, at the time of closing, is a nonresident of Maine.

Withholding Certificate Issued by the State Tax Assessor: A withholding certificate may be issued by the State Tax Assessor to reduce or eliminate withholding on transfers of Maine real property interests by nonresidents.

The certificate may be issued if:

1.No tax is due on the gain from the transfer; or,

2.Reduced withholding is appropriate because the 2.5% amount exceeds the seller’s maximum tax liability. If one of the above is applicable, apply for the certificate no later than five business days prior to closing.

Note: If property is subject to foreclosure and the consideration received for the property does not exceed the debt secured by that property, no Maine income tax withholding is required. Maine Revenue Services does not issue withholding exemption certificates for this type of foreclosure sale (see 36 M.R.S. § 5250-A(3-A)).

Specific Instructions

Email Form REW-5 and all supporting documents to realestate.withholding@maine.gov or fax to (207) 624-5062.

Applicant’s name: Enter the applicant’s (seller’s) name.

NOTE: If there are multiple sellers of the property, each applicant (seller) must complete a separate Form REW- 5, except that married taxpayers that will file a joint Maine individual income tax return requesting a withholding exemption or reduction may complete one form, listing both names and SSN’s on the form.

Mailing address: Enter the applicant’s current mailing

address.

Social Security Number (SSN) or Employer Identification Number (EIN): Enter the SSN or EIN of the applicant listed on this form. If applicable, enter your spouse’s SSN.

E-mail address: Provide the applicant’s email address, or the email address of the applicant’s Power of Attorney (POA). If using the POA’s email, be sure to include page 2 of

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Specific Instructions, continued

Form REW-5 or a properly completed Form 2848-ME. Line 1. If applicant’s ownership percentage is less than 100%, all sellers must be listed on this line. The seller(s) are typically listed on the Purchase and Sale Agreement. Attach additional pages, if necessary.

Line 2. Enter the names(s) of the buyer(s). The buyers are typically listed on the Purchase and Sale Agreement. Attach additional pages, if necessary.

Line 3. Enter the physical address of the property being sold. If applicable, enter the map, block, lot, and sub-lot.

Line 4. Enter the date the seller acquired the property.

Line 5. Indicate the method by which the seller obtained ownership of the property.

a)If you purchased the property, attach verification of the original sales price, such as HUD-1, dually signed Purchase and Sales Agreement, original Real Estate Transfer Tax Declaration (RETTD) or tax assessment from the town when purchased. If you purchased land and built a home, provide proof of the purchase price of the land only.

b)If you inherited the property, provide a complete appraisal dated within six months of the decedent’s death or a copy of the tax assessment from the town. Enter the decedent’s name, SSN and the date of death in the spaces provided.

c)If you received the property as a gift, provide documents to verify the original purchase price paid by the previous owner. If you cannot locate these documents, the town where the property is located may have a record of the purchase price. As a general rule, for purposes of determining the gain, you will use the donor’s adjusted basis at the time of gift as your basis.

Line 6. Enter the amount of the allowable original closing costs you paid at the time of acquisition*. Also see line 9.

Line 7. Provide a list of capital improvements made to the home along with the cost of each improvement. Do not include repairs made to the property. For example: Cleaning or fixing a furnace is not a capital improvement, but installing a new furnace is. If you built the home, provide the information for the build. You can make a detailed list of the

items purchased (including the cost of each and providing receipts), provide a copy of the contract with the builder, provide the building permit filed with the town, or provide the tax assessment from the year you received the certification of occupancy. Attach additional pages as needed.

Line 8. Enter the total gross sales price of the property. Do not subtract any fees. The sale price should match the sales price on the Purchase and Sales Agreement. If there are multiple sellers, list this seller’s ownership percentage.

Line 9. Enter the amount of the applicant’s allowable closing costs from the current sale of this property*. Also see line 6.

*Certain closing costs do not qualify. If available, enclose a copy of the HUD-1 or Closing Statement from when you purchased the property. Closing costs generally include realtor fees, transfer taxes, and deed preparation fees.

For more information about selling your home, determining basis, reporting the sale, capital improvements and costs, see IRS Publication 523.

Line 10. If the property was rented or used commercially, enter the allowed, or allowable, accumulated depreciation determined in accordance with the Internal Revenue Code.

Line 11. Indicate whether the sale will be reported as a gain, loss, exclusion, installment sale or like-kind exchange. If you do not know if the sale will result in a loss or a gain, leave this line blank.

Representative Information & Power of Attorney

Although not required, you may designate someone to represent you during the real estate withholding process. To do so, complete the Representative Information and Power of Attorney sections on page 2 of Form REW-5. The designated representative must be an individual, although a firm cannot be designated as your representative, an individual of a firm can be.

Appointing a Power of Attorney designates a representative to receive confidential information and to discuss tax records related to your Form REW-5 filed with Maine Revenue Services. The designated representative may not act on your behalf, unless a completed Form 2848-ME (Power of Attorney) is provided.

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3. Completing Representative name and title if, Firm or company name, Mailing address, City state zip, Country if not United States Email, Telephone number, Limited Power of Attorney complete, By signing below the selling party, Seller signature, Print name and title if applicable, Additional seller signature if, Date, and Date is essential for the next step, make sure to fill them out in their entirety. Don't miss any details!

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