Non Resident tax on Sale of MD property

[irishgal]

This is my first rehab & resale.  Purchased TH, fixed it up and am now reselling.  Closing is at the end of next week.  I live in VA and the property is in MD.  The title company is just now telling me that since I am a nonresident I will be taxed 4.75% of the sellers purchase price which equals approx $14,000.00.
If I had a resident LLC, I don't think I would be taxed this - so should I form an LLC at this late date?  Is that possible?  How can I transfer title from me to LLC (do not have a mortgage, so DOS isn't an issue)
Any recommendations?

[Dave T]

The agent is slightly wrong.  You will not be paying a tax, but rather 4.75% of your net settlement proceeds, not the purchase price, will be withheld against your MD income taxes.   If you own the property free and clear, and have no settlement costs, then the agent is correct because your net settlement proceeds will be the amount of the purchase price.

One way around this withholding requirement is to have your property financed as high as you can get it before title transfers.  The end result is that your net settlement proceeds will be minimal, and the subsequent withholding impact will be negligible.  Refinance for as high an LTV as you can get.

Forming an LLC to do your rehab flips won't bypass the withholding requirement, instead it will only increase the withholding to 7%.