Property sold out of state.

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My Father-in-law is a resident of Florida and has been for over five years. He is now selling a home he has in Maryland that he used for a primary residence prior to moving to FL. Because he is now a non-resident of MD they are assessing an 8% tax on his capital gains (greater than $40,000). Can he itemize these taxes under the new $40,000 SALT tax law even though he is no longer a resident of MD.

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Hal_AlAnswer

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Q. Can he itemize these taxes, on his federal tax return, under the new $40,000 SALT tax law even though he is no longer a resident of MD?

A. Yes. But, that is only an itemized deduction. Your total itemized deductions must total more than your standard deduction (Single: $15,750; head of household: $23,625; and married filing jointly: $31,500) for that to do you any good.

The 8% assessed at the real estate closing is not the actual tax due on the sale. It is only required state income tax withholding (a rough estimate of the tax due). Your father needs to file a MD non resident income tax return for 2025 to calculated the actual tax. He will most likely get a refund of some of the withholding.

Both the federal and state income tax rules allow an exclusion on the capital gain (up to $250K, $500K married) on the sale of your primary residence. However to qualify, the home must have been you primary residence for 2 out of the 5 years prior to the sale. Since he " is a resident of Florida and has been for over five years", he most likely doesn't qualify for the exclusion.

Hal_Al