What taxes you pay when you sell a house in Maryland

Taxes paid at closing

Maryland has two closing taxes, each charged by the state and/or the county:

• State transfer tax: 0.5% of the price. When the buyer is a first-time Maryland homebuyer buying a home to live in, the rate drops to 0.25% and the seller pays it.
• County (or city) transfer tax: most counties charge one, commonly 1% to 1.5% of the price.
• Recordation tax: charged by the county per $500 of the price, at a rate each county sets.

Who pays is written into the contract. Splitting these taxes between buyer and seller is common, but it is negotiable, and first-time-buyer sales shift more of it to the seller unless the contract says otherwise. Your title company shows the exact figures on the settlement statement.

Capital gains: do you owe income tax on the profit?

If the house was your main home for at least two of the five years before the sale, federal law lets you exclude up to $250,000 of gain ($500,000 for a married couple filing jointly). Most owner-occupants owe no income tax on the sale because of this.

Gain is the sale price minus selling costs and your basis. Your basis is what you paid plus the cost of capital improvements (a new roof, an addition, a kitchen remodel - not routine repairs). Keep the receipts; they lower the gain.

Any taxable gain is reported on your federal return and on your Maryland return, where it is taxed as regular income along with county income tax. Rental and investment property doesn't get the exclusion, and depreciation you took is taxed when you sell.

Selling as a nonresident

If you don't live in Maryland when you sell, the title company must withhold tax at closing and send it to the Comptroller. For sales after June 30, 2025, the rate is 8.75% for individuals and 8.25% for entities, applied to your net proceeds from the sale. If your actual gain is smaller, the Comptroller's form MW506NRS can lower the amount withheld; your title company handles the paperwork.

• The withholding is a prepayment. You file a Maryland nonresident return the next year and get back anything over what you actually owe.
• If the home was your principal residence, or the sale has no gain, you may qualify for an exemption or reduced withholding. Apply ahead of closing on the Comptroller's form (MW506AE), since it takes time to process.
• Sellers at $1.5 million and up can no longer request a tentative refund and must file a full return.

Rates and forms change. Confirm the current numbers with the Comptroller of Maryland or your title company before you plan around them.

Other costs that come out of your proceeds

• Your mortgage payoff and any liens.
• Real estate commission, as agreed in your listing agreement.
• Your share of property taxes and any HOA dues, prorated to the closing date.
• Repairs or credits negotiated after the home inspection. This is where we save sellers the most: Stephen owns a licensed general contractor, so we price inspection repairs from real costs, not a buyer's guess.

Quick answers

Do you pay taxes when you sell a house in Maryland?

You pay your share of the state and county transfer and recordation taxes at closing. You owe income tax on the profit only if your gain is more than the federal home sale exclusion ($250,000 single, $500,000 married filing jointly) or the home was not your main home.

Who pays transfer tax in Maryland, the buyer or the seller?

It is negotiable and set in the contract. In much of Maryland the transfer and recordation taxes are split between buyer and seller. When the buyer is a first-time Maryland homebuyer, the state transfer tax drops to 0.25% and the seller pays it, and the seller pays the recordation and county transfer tax unless the contract says otherwise.

How much is withheld when a nonresident sells Maryland property?

For sales after June 30, 2025 the Comptroller requires withholding of 8.75% for nonresident individuals and 8.25% for nonresident entities, figured on the net proceeds. It is a prepayment, not the final tax; you file a Maryland nonresident return and get back anything withheld over what you owe.

What is a Maryland nonresident for a home sale?

A seller whose permanent home (domicile) is outside Maryland and who does not otherwise qualify as a resident for income tax. Selling a former Maryland home after moving away usually makes you a nonresident seller, though the exemption for a principal residence may apply.

This guide is general information, not legal, tax or financial advice. Rules change and vary by county; confirm the details for your situation with the agency named above, a tax professional or an attorney.