The Maryland MW506AE form is an application used to request a Certificate of Full or Partial Exemption from withholding requirements on the sale of real property by nonresident individuals and entities. This form is essential for ensuring that the appropriate tax obligations are met when selling property in Maryland. If you need to fill out this form, click the button below to get started.
The Maryland MW506AE form is an essential document for nonresident individuals and entities looking to secure a Certificate of Full or Partial Exemption from withholding requirements during the sale of real property and associated personal property in Maryland. This application must be submitted to the Comptroller of Maryland at least 21 days before the closing date of the transaction. The form collects important information about both the transferor/seller and the transferee/buyer, including names, addresses, and identification numbers. Additionally, it requires details about the property being sold, such as its description, sales price, and adjusted basis. Various reasons for exemption can be checked off, including the transfer of a principal residence, tax-free exchanges, or transfers of inherited property. The MW506AE also includes a section for calculating the tax to be withheld, ensuring that all necessary calculations are clearly outlined. Completing this form accurately is crucial, as the Comptroller’s decision regarding the exemption is final and not subject to appeal.
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2011
MARYLAND
FORM
MW506AE
Application for Certificate of
Full or Partial Exemption
For Calendar Year 2011 or other tax year
Beginning ________________ , 2011 and Ending ________________
DO NOT WRITE OR STAPLE IN THIS SPACE
NOTE: This form is to be used only to request 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. This form must be RECEIVED by the Comptroller of Maryland, Revenue Administration Division, NRS Exemption Requests, P.O. Box 2031, Annapolis, MD 21404-2031 no later than 21 days before the closing date.
Transferor/Seller’s Information
Name (If joint, give first names and initials of both)
Last Name
Your Social Security Number
Name (Corporation, Partnership, Trust, Estate, etc.)
Spouse’s Social Security Number
T/A or C/O or Fiduciary
Federal Employer I.D. Number
Current Address (Number and street)
City, State and Zip Code (province, postal code and country)
Transferor/Seller’s Entity Type
Ownership Percentage
Individual
S Corporation
Business Trust
Estate
Partnership
Other:
Trust
Limited Liability Company
______________________________________
_____________________________ %
C Corporation
Limited Liability Partnership
Property Information
Description of Property (Include street address, county, or district, subdistrict and lot numbers if no address
Date of Closing
is available)
Contract Sales Price
Property Account ID Number (if known)
Transferor/Seller Acquired Property By
Transferor/Seller’s Adjusted Basis:
Purchase
1031 Exchange
Purchase price/Inherited value $ ______________________________
Gift
Foreclosure/Repossession
(see instructions)
Inheritance
Other: _____________________________
Add: capital improvements
and settlement costs
______________________________
Use of Property at Time of Sale:
Rental/Commercial
Vacant land
Less: depreciation (if any)
Secondary/Vacation
Adjusted basis:
$ ______________________________
Length of time used for this purpose: Years ___________ Months ________
Transferee/Buyer’s Information
Address (Number and street)
City, State and Zip Code (province, postal code, and country)
Transferee/Buyer’s Entity Type
Limited Liability Parntership
_____________________________________
COM/RAD-306 (Rev. 12/10)
MARYLAND FORM
Application for Certificate of Full or Partial Exemption
Page 2
Transferor/Seller’s Name
Your Social Security Number/FEIN
Reason for Full or Partial Exemption from Withholding
(Attach documentation and calculation)
1.☐ Transfer is of a principal residence as defined in IRC §121.
2.☐ Transfer is a tax-free exchange for purposes of IRC §1031 and is treated as:
☐simultaneous without boot,
☐simultaneous with boot, or
☐delayed, with funds in escrow for acquiring replacement property.
3.☐ Transfer is pursuant to an installment sale under IRC §453 and the transferor/seller will receive less than the full purchase price during the taxable year.
4.☐ Transfer of inherited property is occurring within 6 months of date of death.
5.☐ Transferor/Seller is receiving zero proceeds from this transaction.
6.☐ Transfer is pursuant to a transaction under a specific section of the Internal Revenue Code or other code. Place code letter for your transaction in the box below. (See instructions for detailed descriptions):
☐
7. ☐ Other. Provide a brief explanation in the space provided:
Calculation of Tax to be Withheld
1.
Enter the amount subject to tax witholding. Subtract adjusted basis from contract sales price
2.
Enter tax rate, whichever applies.
a. If you are a business entity, enter 8.25%
........................................................... .......................................
b. If you are an individual, enter 6.75%
...........................................................
3.
Amount of tax to be withheld at closing. Line 1 multiplied by line 2. (This line MUST be completed.)
1
2
3
Please
Sign
Here
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.
_____________________________________________
___________________________
Signature
Applicant’s phone number
Date
(Rev. 12/10)
INSTRUCTIONS FOR APPLICATION FOR
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 a husband and wife filing a joint Maryland income tax return, a separate Form MW506AE is required for each transferor/seller.
IMPORTANT: The completed Form MW506AE 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.
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
Enter the tax year of the transferor/ seller if other than a calendar year.
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.
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.
Enter the contract sales price of the property being sold or transferred.
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 that describes the transferor/seller’s acquisition of the property. Check the box that describes the transferor/seller’s use of the property at the time of the current sale, and enter the length of time
the property has been used for this purpose.
Complete the transferor/seller’s adjusted basis section by entering the purchase price when the transferor/ seller acquired the property, adding the cost of capital improvements (including acquisition costs such as commissions and state transfer taxes), and subtracting depreciation, if applicable. If inherited property, use the Date of Death value of the property.
Enter the name and address.
Check the box indicating the transferee/buyer’s entity type.
Attach schedule if there are multiple transferees/buyers.
Check the box in the “Reason for Exemption” column that indicates the reason you are requesting a full or partial exemption from the income tax withholding requirements.
Specific Line Instructions for Reason for Full or Partial Exemption
Line 1. 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.
Required Documentation: Copy of contract of sale or copy of estimated HUD-1 settlement sheet; copy of HUD-1 settlement sheet from purchase of property, if claiming settlement expenses as part of adjusted basis; and receipts and invoices for any capital improvements you are claiming.
Line 2. Transfer is a tax-free exchange for purposes of §1031 of the Internal Revenue Code.
Required documentation: 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.
Line 3. Transfer is pursuant to an installment sale under §453 of the Internal Revenue Code.
Required documentation: Copy of contract of sale or copy of HUD-1 settlement sheet; 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.
Line 4. Transfer of inherited property is occurring within 6 months of date of death.
Required Documentation: Provide a copy of the death certificate and a copy of the estimated HUD-
1 settlement sheet from the title company.
Line 5. Transferor/seller is receiving zero proceeds from this transaction.
Required Documentation: A 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.
Line 6. Transfer is one of the following transactions. Please note the code letter and record it in the box on page 2 of Form MW506AE.
a. Transfer is to a corporation con- trolled by the transferor for purposes of §351 of the Internal Revenue Code.
Required documentation: Copy of the agreement of sale; Certificate of Good Standing of transferee is- sued by the state in which transferee is incorporated; notarized affidavit executed on behalf of transferee by its President 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 trans- feree’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 apprais- al establishing the fair market value,
at the time of the exchange, of any
property other than stock in the trans- feree 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 con- sideration for the exchange must be stated on the application as the taxable amount.
b. Transfer is pursuant to a tax-free reorganization as described in §361 of the Internal Revenue Code.
Required documentation: Copy of agreement governing the transfer between transferor and transferee; Cer- tificates of Good Standing of transferor and transferee issued by the state(s) in which transferor and transferee are incorporated; copy of the plan or reor- ganization showing that transferor and transferee are parties to the reorgani- zation; 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 distribut- ed 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 con- sideration for the exchange must be stated on the application as the taxable amount.
c. Transfer is by a tax-exempt entity for purposes of §501(a) of the Internal Revenue Code and transfer involves limited or no unrelated business tax- able income under §512 of the Internal Revenue Code.
Required documentation: Copy of determination by the Internal Revenue Service that transferor is a tax-exempt entity for purpose of §501(a) of the Internal Revenue Code; Certificate of Good Standing of transferor issued by the state in which transferor is incorpo- rated; notarized affidavit executed on behalf of transferor by its President and by its Treasurer stating that the transfer involves limited or no unrelated busi- ness income under §512 of the Internal Revenue Code.
d. Transfer is to a partnership in exchange for an interest in the part- nership such that no gain or loss is recognized under §721 of the Internal Revenue Code.
Required documentation: Copy of agreement governing transfer between transferor and transferee; copy of the partnership agreement of the trans- feree.
e. Transfer is by a partnership to a partner of the partnership in accor- dance with §731 of the Internal Rev- enue Code.
Required documentation: Copy of agreement governing transfer between transferor and transferee; copy of the partnership agreement of the transferor.
f. Transfer is treated as a transfer by a real estate investment trust for pur- poses of §857 of the Internal Revenue Code.
Required documentation: Copy of agreement governing transfer between transferor and transferee; certified copy of Articles of Incorporation of trans- feror; Certificate of Good Standing of transferor issued by the state in which transferor is incorporated.
g. Transfer is pursuant to a condem- nation and conversion into a similar property for purposes of §1033 of the Internal Revenue Code.
Required documentation: Copy of agreement governing transfer between transferor and government body or authority condemning the property; notarized affidavit executed by trans- feror stating that transferor will identify and purchase replacement property within the time limits required 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 ex- cess must be stated on the application as the taxable amount.
h. Transfer is between spouses or in- cident to divorce for purposes of §1041 of the Internal Revenue Code.
Required documentation: Copy of marriage license or divorce decree; copy of deed which will be recorded to accomplish the transfer; if incident to divorce, copy of section of court order or separation agreement governing transfer of the property.
i. Transfer is treated as a transfer by an S corporation for purposes of §1368 of the Internal Revenue.
Line 7. Other. The transfer is otherwise fully or partially exempt from the recognition of gain in accordance with provided explanation.
Required documentation: Attach any and all documents necessary to show that the transfer is fully or partially exempt from tax. This may include a copy of contract of sale or copy of estimated HUD-1 settlement sheet; copy of HUD-1 settlement sheet from purchase of property, if claiming settlement expenses as part of adjusted basis; and receipts and invoices for any capital improvements you are claiming.
Complete this section if you are requesting a partial exemption. This section must be completed or the application for partial exemption will be denied.
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.
Please include a daytime telephone number where you can be reached between 8:00 AM and 5:00 PM.
Your signature(s) signifies that your application, including all attachments, is, to the best of your knowledge and belief, true, correct and complete, under the penalties of perjury.
If a power of attorney is necessary, complete federal Form 2848 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
Additional Information
For additional information visit www.marylandtaxes.com, e-mail nrshelp@comp.state.md.us or call
1-800-MDTAXES (1-800-638-2937) or 410-260-7980 in Central Maryland.
Understanding the Maryland MW506AE form is essential for nonresident individuals and entities involved in real estate transactions. However, several misconceptions can lead to confusion. Here are eight common misunderstandings:
Being aware of these misconceptions can help ensure a smoother process when dealing with the Maryland MW506AE form. Always verify the requirements and stay informed to avoid unnecessary complications.
Filling out the Maryland MW506AE form can be a straightforward process, but many people make common mistakes that can lead to delays or issues with their application. One significant error occurs when individuals forget to include the correct tax year. The form requires you to specify the year for which the exemption is being requested. Omitting this detail can cause confusion and may result in the application being rejected.
Another frequent mistake is failing to provide complete information about the transferor or seller. This includes not only the name but also the Social Security number or Federal Employer Identification Number. In cases where there are joint sellers, both names and their respective identification numbers must be included. Incomplete information can delay the processing of the form and lead to unnecessary complications.
Many applicants also overlook the importance of accurately calculating the adjusted basis of the property. This section requires you to provide details about the purchase price, capital improvements, and any depreciation. If these figures are incorrect or missing, it can affect the exemption you are requesting. Always double-check your calculations to ensure they are accurate and complete.
Documentation is another area where mistakes often occur. The MW506AE form requires supporting documents for certain exemption claims. For example, if you are claiming a principal residence exemption, you must attach a copy of the contract of sale or the HUD-1 settlement sheet. Failing to include the necessary documentation can lead to a denial of your application.
Additionally, some people neglect to check the appropriate box for the reason for the exemption. The form provides several options, and it’s crucial to select the one that accurately reflects your situation. If you choose the wrong reason or leave it blank, it could result in delays or a rejection of your request.
Finally, not signing the form is a common oversight that can halt the entire process. The MW506AE must be signed by the applicant, and if it is prepared by someone else, that person must also sign it. Without signatures, the form will be considered incomplete, and the application will not be processed.
The Maryland MW506AE form is essential for nonresident individuals and entities seeking a Certificate of Full or Partial Exemption from withholding requirements on the sale of real property. However, it is often accompanied by several other forms and documents that can facilitate the process. Here’s a list of some commonly used documents that may accompany the MW506AE form, along with a brief description of each.
Understanding these forms and documents can greatly ease the process of applying for an exemption and ensure that all necessary information is provided. Proper documentation not only streamlines the application process but also helps prevent delays or complications during the sale of the property.
The Maryland MW506AE form is similar to the IRS Form 8288, which is used for withholding tax on the disposition of U.S. real property interests by foreign persons. Both forms serve to address tax withholding requirements during real estate transactions. The MW506AE is specific to Maryland and focuses on exemptions for nonresidents, while Form 8288 is a federal requirement applicable to nonresident aliens and foreign entities. Each form requires detailed information about the property, the seller, and the nature of the transaction, ensuring compliance with tax obligations.
Another document that shares similarities with the MW506AE is the IRS Form 8824, which is utilized for reporting like-kind exchanges under Section 1031 of the Internal Revenue Code. This form allows taxpayers to defer capital gains taxes when exchanging real estate for similar property. Like the MW506AE, Form 8824 necessitates detailed information about the properties involved, the fair market values, and the nature of the exchange. Both forms aim to provide clarity on tax implications related to property transactions.
The Maryland Form MW506AE also resembles the IRS Form 4797, which is used for reporting the sale of business property. This form requires taxpayers to report gains and losses from the sale of business assets, including real estate. Similar to the MW506AE, Form 4797 helps determine the tax implications of property transfers. Both documents require a calculation of the adjusted basis and sales price, ensuring that all relevant financial details are accurately reported to the tax authorities.
Additionally, the MW506AE is akin to the IRS Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return. This form is filed to report the estate tax owed on the transfer of property upon a person's death. Both forms involve the transfer of property and require information about the property's value and the transferor's adjusted basis. They help determine tax liabilities that arise from property transactions, although the contexts differ significantly.
The Maryland MW506AE form is also similar to the IRS Form 1099-S, which is used to report the sale or exchange of real estate. This form provides information about the proceeds from the sale, which is critical for tax reporting. Both forms are concerned with the transfer of real property and require details about the seller, buyer, and transaction specifics. They ensure that all parties fulfill their tax obligations related to real estate transactions.
Another comparable document is the Maryland Form 502, which is the Maryland Resident Income Tax Return. While the MW506AE focuses on withholding exemptions for nonresidents, the Form 502 is for residents to report income and pay taxes. Both forms require detailed financial information and calculations to determine tax liabilities. They serve to ensure compliance with Maryland tax laws, although they cater to different taxpayer categories.
The MW506AE also has similarities with the IRS Form 4506-T, which is a request for the transcript of a tax return. This form is essential for individuals needing to verify their tax history when involved in property transactions. Both forms serve the purpose of ensuring transparency and compliance in tax reporting, although the MW506AE is more specific to property transactions and withholding exemptions.
For those involved in commercial real estate, comprehending various forms is crucial for smooth transactions. A Florida Commercial Lease Agreement form serves a vital role in this context, defining the specifics of the lease arrangement. Those interested can find a comprehensive resource for this form at floridadocuments.net/fillable-commercial-lease-agreement-form, which provides essential information regarding its terms and conditions.
Lastly, the MW506AE is comparable to the Maryland Form 1, which is the Maryland Corporate Income Tax Return. This form is used by corporations to report their income and calculate tax liabilities. Both forms require detailed information about the entity, the nature of the transaction, and the financial details involved. They help ensure that all entities comply with Maryland tax regulations, although they apply to different types of taxpayers.