Level 2

Desperately need help with Maryland Non-Resident after sale of MD property

Forum|Forum|9 months ago
September 22, 2025
2 replies
16 views

MD resident until 2007, then moved and rented residence until 2023, when sold.

Lives in PA, employed in PA, only had rental losses each year so never filed MD return. Had over $200K in losses never claimed (PA doesn't allow it) to offset 'gain' on sale.

Forms 505 and 505NR convert ALL income to MD income (makes NO sense). Can't seem to get any help ANYWHERE and telephonic hearing is tomorrow.

Any experts out there know what form should be used and/or how this is reported?

George4Tacks

Level 15

If you mention the software you are using that would help to give you some assistance. You just exhibited why you should file that nonresident return every year, even if it is a loss.

Answers are easy. Questions are hard!

J

Janet-PAAuthor

Level 2

Hi George,

I generally used TurboTax, then Drake one year, now ProConnect for a last year. The 2023 return was done w/ TurboTax. Although I clearly included every year that the property was in MD (when I changed software and had to enter identifying information for the rental) it didn't pick up correctly that a MD return would be a good idea.

If I didn't catch that a state with reciprocity (PA and MD) and NO positive net income in MD required a filing (and now I find that it actually.....doesn't...one result of the hearing today), I doubt any other non-tax-professional (at the time) would.

George4Tacks

Level 15

Since 2023 was TurboTax, you need to post on their community for help to get the proper income tied to the proper state. There are similarities to ProSeries, but nothing in Lacerte or ProConnect will get you the help you need. This SEARCH might get you started. All of the different Intuit products are profit motives, but their support venues are not related.

Answers are easy. Questions are hard!

sjrcpa

Level 15

Were those losses reported on the federal return? Does federal 8582 have passive loss carryovers?

MD Nonresident Form 505 and 505NR are the correct forms.

Wasn't MD tax withheld from the sale proceeds?

The more I know the more I don’t know.

Taxes-by-Rocky

Level 7

Ignoring - for the moment - that you may not have captured potential suspended loss carryovers in MD, I believe that their might have been tax withholding on the sale which would have been reported on a Form MW506RS as a result of the sale by a MD Nonresident. You used to reclaim that tax on the sale of the property. Check the closing binder/documents for that form. [Hope it helps.]

J

Janet-PAAuthor

Level 2

You're spot on. The losses were reported on the Federal return every year (and the corresponding amount on the PA returns, which disallows deductions for rental income up to the amount of any other rental income, of which there is none).

The tax withholding in MD on a sale is solely based on the proceeds (at about 8%) and as well know, the proceeds has little to no relevance to actual gain. If I was totally exempt (as for sale of a personal residence) the MW506RS would be applicable, but in this case, nope. ;-(

Lesson to others...even if it's not required, if you've got activity in a state, try to get that return in. I hate that it's a bit of a money-grab for accountants, but it might eventually be beneficial. Oh....and don't trust your software to know the rules. I'm guessing the Intuit products don't really pay attention to the state you say your operation (in this case the rental) is in and also probably just noted 'reciprocal state' and didn't require MD return.

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