Maryland Form Mw506ae - Application For Certificate Of Full Or Partial Exemption - 2014 Page 3
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MARYLAND
INSTRUCTIONS FOR APPLICATION FOR
FORM
CERTIFICATE OF FULL OR PARTIAL EXEMPTION
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
contract amount for the original purchase. DO NOT in-
clude settlement costs or other adjustments in this line.
Purpose of Form
If inherited property, use the Date of Death value of the
Use Form MW506AE to apply for a Certificate of Full or Partial
property. You must attach an original HUD-1 (settle-
Exemption from the withholding requirements on the proceeds
ment statement), property tax printout (available at
of the sale of real property and associated personal property in
), original contract, date of death
Maryland by nonresident individuals and nonresident entities. A
appraisal, or other proof of original purchase price.
nonresident entity is defined to mean an entity that: (1) is not
Line 2.
Enter amount of capital improvements. You must at-
formed under the laws of Maryland and (2) is not qualified by or
tach paid invoices or receipts with cancelled checks for
registered with the Department of Assessments and Taxation to
improvements. Documentation must include proof of
do business in Maryland.
payment, address of property, and work completed.
Who May File an Application
Line 3.
Settlement costs. You must attach a HUD-1 for this
An individual, fiduciary, C corporation, S corporation, limited
amount. You may add both settlement costs for pur-
liability company, or partnership transferor/seller may file Form
chase and sale of the property. If a preliminary HUD-1
MW506AE. Unless the transferors/sellers are spouses filing a
is not available at time of filing, you must forward as
joint Maryland income tax return, a separate Form MW506AE is
soon as completed in order to be credited for these
required for each transferor/seller.
costs.
IMPORTANT: The completed Form MW506AE and all required
Line 4.
Add lines 1 through 3.
documentation must be received by the Comptroller of Mary-
Line 5.
Depreciation. Enter all depreciation already taken for
land no later than 21 days before the closing date of the sale or
this property, if rental or commercial, on any income
transfer to ensure timely receipt of a Certificate of Full or Partial
tax return. You must attach a depreciation schedule or
Exemption.
returns.
The Comptroller’s decision to issue or deny a Certificate
Line 6.
Adjusted basis. Subtract line 5 from line 4. This is your
of Full or Partial Exemption and the determination of the
adjusted basis.
amount of tax to be withheld if a partial exemption is
granted are final and not subject to appeal.
Line 7.
Contract Sales Price. Enter contract sales price. You
must attach current contract (page 1 and signature
SPECIFIC INSTRUCTIONS
pages only) or HUD-1.
Enter the tax year of the transferor/seller if other than a calen-
Line 8.
Amount subject to tax. Subtract line 6 from line 7.
dar year.
Line 9.
Tax Rate. Select which tax rate applies.
Transferor/Seller’s Information
Line 10. Tentative Withholding Amount. Multiply line 8 by the tax
Enter the name, address and identification number (Social Se-
rate. This is the tentative amount of withholding. If zero
curity number or federal employer identification number) of the
or less than zero, enter zero. If zero, you may qualify
transferor/seller applying for the exemption. If the transferor/
for a full exemption (subject to verification).
seller was issued an individual taxpayer identification number
(ITIN) by the IRS, enter the ITIN.
Note: This amount will be calculated by the Comptroller’s Office
based on actual documentation received.
Check the box indicating the transferor/seller’s entity type.
Special Situations
Enter the transferor/seller’s ownership percentage of the prop-
erty. For example, if there are four equal owners, please enter
Principal Residence.
25% for single application.
Transfer is of your principal residence as defined in §121 of the
Property Information
Internal Revenue Code, which means it has been your principal
residence for two of the last five years. Resident income tax re-
Enter the description of the property, including the street
turns must have been filed to claim principal residence. This will
address(es) for the property as listed with the State Department
be verified by the Comptroller’s Office.
of Assessments and Taxation (SDAT), including county. If the
property does not have a street address, provide the full prop-
Principal Residence – Active-duty Military, Certain Gov-
erty account ID numbers used by SDAT to identify the property.
ernment Employees.
Enter the date of closing for the sale or transfer of the property.
Transfer is of your principal residence as defined in §121 of
the Internal Revenue Code, if you had a move necessitated by
Enter the property account ID number, if known. If the property
government orders. Attach transfer orders and proof of resi-
is made up of more than one parcel and has more than one
dency. This may include federal income tax return with Maryland
property tax account number, include all applicable property ac-
address, utility bills, property tax statements, etc. Please see
count ID numbers.
Internal Revenue Service Publication 523.
Check the box to indicate whether the property was used for
Tax-Free Exchange for purposes of §1031 of the Internal
rental/commercial purposes. Maryland law requires that nonresi-
Revenue Code.
dents owning real property in Maryland file a nonresident income
tax return reporting any rental income or loss. If you checked
Required documentation in addition to that on page 1. Letter
signed by the qualified intermediary, or by the person autho-
the rental/commercial box and did not file returns reporting this
income or loss, your application will be denied. Please file all ap-
rized to sign on behalf of a business entity acting as the qualified
propriate returns before filing this application.
intermediary, which states the name(s) of the transferor(s), the
property description, that the individual or business will be act-
Calculation of Tentative Exemption/Withholding Amount
ing as the qualified intermediary for the transferor(s) as part of a
Complete the calculation of tentative exemption section.
§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
Line 1.
Enter the purchase price of the property. This is the
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