Maine Real Estate Withholding Exemption

Title 36, §5250-A: Withholding on sales of real estate

1. What is Maine real estate withholding? Rev. 2/3/21. Back to top.
2. Are there any exceptions to the Maine real estate withholding requirement? Yes. If the seller is a resident of Maine at the time of the sale, if the consideration is less than $100,000 (see note below) or if the capital gain is not recognized for federal or Maine income tax purposes, withholding is not required.
3. Can the Maine real estate withholding amount be reduced? Yes. The seller may submit a request to the State Tax Assessor to reduce the withholding. If the seller is a nonresident individual or trust and the estimated tax on the realized gain (that is, the gain multiplied by the applicable highest marginal tax rate) is less than 2.5% of the sales price, the lower withholding amount may be allowed.
4. How do I request an exemption or a reduction of the withholding? Form REW-5 must be completed to request an exemption or a reduction in the real estate withholding amount.
5. When is the request for an exemption or reduction due? A request for exemption or reduction in real estate withholding (Form REW-5) should be filed as soon as the seller and buyer have reached an agreement to transfer property.
6. What is the Maine real estate withholding based on if the property is sold on an installment sale basis? The required withholding amount is still 2.5% of the total sales price.
7. Am I subject to the Maine real estate withholding requirement if the sale of the Maine real property is considered a Section 1031 like-kind exchange?
8. Are nonresident individuals selling property in Maine the only individuals subject to the real estate withholding requirement? Yes. Although Maine resident individuals are also subject to Maine income tax on gains realized from the sale of real estate, only nonresident individuals are subject to the Maine real estate withholding requirement.
9. Am I subject to Maine real estate withholding if I placed my Maine home on the market as a Maine resident but don't sell the property until after I have become a nonresident?
10. Is the Maine real estate withholding amount considered the final Maine income tax due on the sale of my Maine property? No. The Maine real estate withholding amount is only an estimate of the income tax due on the gain from the sale of the Maine property.

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