Does Maryland have an exit tax when you sell a house?

No. The nonresident withholding at settlement, 8.75 percent of the total payment for an individual, is a prepayment of the income tax you would owe on the gain. If you owe less, you get the difference back on your Maryland nonresident return.

Do I pay capital gains on an inherited house in Maryland?

Usually little or none. Your basis is the value on the date of death, so a house sold soon after for about that value has no gain. Maryland has no inheritance tax between parents and children.

Does selling for cash change my capital gains?

No. Gain is price minus basis minus selling costs whatever kind of buyer pays. A cash sale has fewer selling costs to deduct and a lower price; the tax follows the gain either way.

Maryland

Do I owe capital gains tax when I sell my house in Maryland?

Only on the gain above your basis. If the house was your main home for two of the last five years, federal law excludes up to $250,000 of gain, or $500,000 for a married couple. Maryland taxes any gain that is left as ordinary income. An inherited house starts at its value on the date of death.

The short version

Gain is the sale price minus what you paid, improvements and selling costs. A cash sale does not change the math; it only changes which costs you had.
The federal exclusion under section 121 is $250,000 for one owner and $500,000 for a married couple filing jointly, if you owned and lived in the house for two of the five years before the sale. Time in a care facility can count toward the use test.
Inherited houses get a stepped up basis to the value on the date of death, so a parent’s house sold soon after usually has little or no gain.
If you have moved out of Maryland, the title company must withhold 8.75 percent of the total payment at settlement (8.25 percent for an entity) under Tax-General § 10-912, the rate in effect since July 1, 2025. It is a prepayment of Maryland income tax, not a separate tax, and you recover any excess on a nonresident return. An exemption or reduction can be requested in advance on Form MW506AE.

What to do before settlement

Pull your purchase settlement statement and receipts for improvements. Basis is what reduces the taxable gain.
If you live out of state, ask the title company about the withholding early and file Form MW506AE with the Comptroller if an exemption applies, before closing, not after.
If the house is an estate, get the date of death value documented. That is the basis.
Give the settlement statement to whoever does your taxes. The gain is reported for the year of settlement.

Cases that change the answer

A rental you never lived in. No exclusion; the whole gain is taxable, plus depreciation recapture. A 1031 exchange can defer it if you buy another investment property on the IRS timeline.
A second home. No exclusion either, but the full basis counts.
You lived there less than two years. A partial exclusion exists for a move forced by work, health or certain unforeseen events.
Nothing on this page is tax advice. It is what sellers ask us and where the answer comes from. Confirm your own numbers with a Maryland tax preparer. The closing cost side is on seller closing costs in Maryland.

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Maryland seller questions

Does Maryland have an exit tax when you sell a house?: No. The nonresident withholding at settlement, 8.75 percent of the total payment for an individual, is a prepayment of the income tax you would owe on the gain. If you owe less, you get the difference back on your Maryland nonresident return.
Do I pay capital gains on an inherited house in Maryland?: Usually little or none. Your basis is the value on the date of death, so a house sold soon after for about that value has no gain. Maryland has no inheritance tax between parents and children.
Does selling for cash change my capital gains?: No. Gain is price minus basis minus selling costs whatever kind of buyer pays. A cash sale has fewer selling costs to deduct and a lower price; the tax follows the gain either way.