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220622181
New Member

Maryland filing requirement for Virginia resident

I am a Virginia resident. In 2019, I sold real estate located in MD through a LLC (I am the sole member). 1)Do I have to file a MD nonresident return for 2019? 2)Do I also have to include the sale in my VA individual return? 3)If so, do I get a credit for taxes paid in MD? 

2 Replies
KurtL1
Expert Alumni

Maryland filing requirement for Virginia resident

Yes, you will need to file a non-resident return in the State of Maryland. The income from the sale was earned on property located within the state and Maryland requires that a return must to be filed with the state. 

 

When filing the Maryland return you should include in your state withholding the tax paid on behalf of the nonresident transferor that was reported on Form MW506NRS.  MD Withholding Requirements (page 3)

 

On your Virginia return you could be able to subtract from your Virginia Taxable Income the amount of Long-Term Capital Gains.on the sale of the property. Virginia Income Subtractions

 

If you are unable to subtract the income on the sale you will be able to get a credit for the income taxes you paid to Maryland. Credit For Taxes Paid To Another State

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Hal_Al
Level 15

Maryland filing requirement for Virginia resident

@KurtL1 - I doubt this sale of property qualifies for the VA capital gains deduction, which is limited to certain business assets. "Income taxed as a long-term capital gain, or any income taxed as investment services partnership income for federal tax purposes is allowed as a subtraction provided the income is attributable to an investment in a 'qualified business' ". See https://www.tax.virginia.gov/subtractions#long-term-capital

 

However, the taxpayer would be allowed a credit for the tax paid to MD

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