Jean-Paul, a Quebec resident, owns a seasonal camp on Moosehead Lake in Maine that he purchased 10 years ago. He sells the property for $320,000 to a Maine couple. At closing, the buyers' attorney advises that a withholding amount must be remitted to Maine Revenue Services. Which of the following statements correctly describes this obligation?
Correct Answer
B) The buyer or closing agent must withhold 2.5% of the $320,000 consideration and remit it to Maine Revenue Services
Maine requires non-resident seller withholding under Maine Revenue Services rules. When a non-Maine resident (here, a Quebec resident) sells Maine real property, the buyer or their closing agent is responsible for withholding 2.5% of the total consideration — in this case, 2.5% × $320,000 = $8,000 — and remitting it to Maine Revenue Services as a prepayment of the seller's Maine income tax liability. The obligation to withhold and remit falls on the buyer or closing agent, not the seller.
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Related Topics & Key Terms
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Related Concepts
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
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A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
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