A purchase and sale agreement in Maine is signed for a property where the seller is a non-Maine resident who purchased the property as a vacation home five years ago. The closing is scheduled in 30 days. The buyer's attorney advises the buyer about Maine's non-resident seller withholding requirement. Which of the following most accurately describes the withholding obligation?
Correct Answer
D) The buyer or closing agent must withhold 2.5% of the consideration and remit it to Maine Revenue Services
Under Maine's non-resident withholding tax rules, when a non-Maine resident sells real property in Maine, the buyer or closing agent is required to withhold 2.5% of the consideration (sale price) and remit it to Maine Revenue Services as a prepayment of the seller's Maine income tax liability. This is a unique Maine requirement that places the withholding obligation on the buyer or their closing agent, not on the seller directly.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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