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We are required to report certain real estate transactions to the IRS using Form 1099-S. Click here to access the “Certification for No Information Reporting on the Sale or Exchange of a Principal Residence” form, which you will be required to complete at settlement. In general, reporting is not required if the property was your principal residence, was not used for business or rental purposes and the sale is for less than $250,000 for an individual or $500,000 for a married couple. We are not required to report the sale if the seller is a corporation.

If the property you are selling is located in Maryland, all non-Maryland residents are subject to withholding tax, which is collected on the Closing Disclosure and sent to the State of Maryland with the Deed for recordation. There are exceptions in the withholding regulations; however, you must obtain a WAIVER PRIOR TO SETTLEMENT. The withholding regulations and answers to most of your questions can be found on the Comptroller of Maryland Website.

Section 1445 of the Internal Revenue Code is titled FIRPTA, Foreign Investment in Real Property Tax Act, which provides that a transferee of a US real property interest must withhold tax if the transferor is a foreign person. Further information can be found on the IRS Website.

Our underwriter, First American Title Insurance Company, provides an extremely helpful four-part guide to helping homeowners prepare their home for a quick and profitable sale. We hope you find these guides useful as you prepare your home for sale. Click here to access them.

If the seller is an “Entity”, certain documents must be reviewed to insure that the organization has the authority to sell the property. With respect to corporations, limited partnerships, LLCs and LLPs, a failure to properly register with the State Department of Assessments and Taxation (SDAT) may negate that authority until the entity is “in good standing” with the state. We will require verification as to who is authorized to execute documents on behalf of the organization, as well as a resolution authorizing the transaction. Click here for a list of documents for each type of entity.

Section 1031 of the Internal Revenue Code allows you to defer the payment of capital gains taxes, provided the proceeds of sale are used to purchase other like-kind investment real estate. There are specific rules governing the transaction, which must be complied with in order to have the exchange qualify under IRS regulations. Exchanges can be simultaneous or deferred, as defined by the Code. The principal considerations are that the relinquished property and the replacement property must be “like-kind” – held for use in a trade or business or for investment. If a deferred exchange is utilized, very specific time restrictions must be adhered to – for example, the replacement property must be identified within 45 days of the settlement on the relinquished property. Up to three properties can, and should be, identified, however their total value cannot exceed a percentage of the value of the relinquished property. Settlement on the replacement property must be completed within 180 days or before the due date of the next tax return. The proceeds of sale cannot be disbursed to the seller but are rather disbursed to a qualified intermediary who acts on behalf of the seller to acquire the replacement property. Both the contract to sell and the contract to purchase must contain language that identifies the transaction as part of a 1031 Exchange.

TitleMax utilizes the services of First American Exchange Services, a subsidiary of First American Title, to facilitate all exchanges. By employing a company dedicated to the satisfactory completion and compliance of only exchange transactions, you are assured that every regulation has been met and that the IRS will not subsequently challenge or attempt to tax the transaction. Additionally, with First American your funds are guaranteed to be safe and your qualified intermediary to be accountable.

TitleMax has negotiated a very competitive fee with First American for their services. Click here to access the First American 1031 Exchange Services website, which will answer any questions you may have on the exchange process. Please make sure to notify TitleMax at the time of your order if your transaction involves a 1031 Exchange.

If you are purchasing a new home in Maryland, Virginia or the District of Columbia, TitleMax can save you money. Please call our office to inquire about Preferred Client Rates when you are ready to complete settlement on your home.

Any associate, friend or neighbor you refer will also be entitled to our Preferred Client Rates and receive the same preferential treatment you have come to expect from TitleMax.