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Non-Maine residents who sell real estate located in Maine are subject to a withholding amount equal to 2.5% of the sale price. This withholding is used as an estimated tax payment towards any Maine tax liability on the gain realized from the state.

§ 5250-A requires a buyer to withhold state income tax when real property located in Maine is acquired from a nonresident of Maine. The buyer must withhold and remit to the state tax assessor 2.5% of the consideration received by the transferor (seller) on the transfer.

Note: Federally taxable gains on the sale of Maine real property are taxable by Maine, even if the total consideration is less than $100,000.

Wages, business income, and capital gains from sources within Maine are Maine income even if you received the income as a nonresident. All part-year residents, nonresidents and safe harbor residents must send a copy of their federal return with their Maine return.

7. How much must be withheld? You must withhold 7.15% of the estimated Maine source distributive income of each nonresident member, except you must withhold 8.93% if the nonresident member is a C corporation.

Some individuals may be eligible for an exemption or reduction of the required REW payment. To apply for an exemption or reduction, use Form REW-5. This form must be submitted at least 5 business days prior to the closing. Forms not received timely may be denied an exemption or reduction.

Note: Federally taxable gains on the sale of Maine real property are taxable by Maine, even if the total consideration is less than $100,000.

The buyer of the property will withhold and remit the Real Estate Withholding money to Maine Revenue Services using form REW-1. The amount to be withheld is equal to 2.5% of the sale price.