Baltimore City closing costs: transfer tax, recordation tax and who pays

Baltimore City is its own jurisdiction, separate from Baltimore County, with its own transfer tax, its own recordation tax, its own tax office and its own land records. This guide is for buyers, sellers and agents working on a sale inside the city line. It covers what the city and state charge at settlement, who pays each tax, how the owner-occupant exemption works, and the paperwork that can slow a city settlement down. It is general information, not legal advice for your sale. For other parts of the state, see the Maryland areas we serve.

A “Baltimore, MD” mailing address does not prove a home is in the city. Parts of Baltimore County and Anne Arundel County use Baltimore addresses too; our Brooklyn Park guide explains one example. Look the property up on SDAT’s Real Property Search before you rely on any figure below.

The taxes on a Baltimore City sale

• 0.5%State transfer tax0.5% of the price, the same everywhere in Maryland.
• 1.5%City transfer tax1.5% of the price. With the state tax, that is 2% in all.
• $5.00 per $500Recordation tax$5.00 for each $500 of the price or part of $500, roughly 1%.
• Yield taxOnly on transactions over $1,000,000 (see below).

A purchase-money mortgage recorded with the deed does not add recordation tax of its own. The figures in this guide are government taxes only. Title insurance, the settlement fee, lender charges, recording fees, and property tax and HOA adjustments come on top; the instant quote gives the full picture.

The owner-occupant exemption: two rules, not one

Baltimore City lets a buyer who will live in the home skip tax on the first $22,000 of the price. The city code sets this out twice, with one important difference:

• Recordation tax. The first $22,000 is exempt for an owner-occupant at any price.
• City transfer tax. The same amount is exempt only when the total price is under $250,000.

Either way, the buyer must sign a statement under oath, included with the deed, that they will live in the home as their main residence for at least 7 of the 12 months after settlement. A buyer who will not live there, such as an investor or a second-home buyer, does not qualify.

The saving goes to the buyer, even when the contract splits the taxes equally. It goes to the seller only when the seller is paying the whole tax, either because the contract says so or because the buyers are first-time Maryland home buyers.

Sales over $1 million: the yield tax

Once a transaction’s value goes over $1,000,000, the city adds a yield tax. It equals 40% of the city transfer tax plus 15% of the recordation tax. Put simply, the city transfer tax on that sale goes up by 40% and the recordation tax by 15%. Most of the money goes to the city’s Affordable Housing Trust Fund.

The yield tax is paid by its own check to the Director of Finance when the deed is taxed. City law makes the buyers and the sellers jointly and severally liable for it, which means the city can collect all of it from either side. On a large sale, the sales contract should say who pays it. It is not limited to homes: commercial and multi-unit sales over the threshold pay it too.

The lien certificate comes first

The lien certificate is the step most likely to hold up a city settlement. For a sale (or any deed where someone is coming out of title), a current lien certificate must accompany the deed and every lien on it must be paid in full (with validated receipts) before the deed goes to the transfer tax office. A certificate costs $55, takes 7-10 business days, and expires 45 days after issue or on June 30, whichever is first; an expired certificate must be reordered. Notations for clean and board, alley paving or miscellaneous bills must be checked with the issuing agency.

Because the certificate expires, timing matters: ordered too early, it can lapse before settlement and must be ordered again. Items that often turn up on it:

• Water bills. Unpaid city water charges are a lien on the property under city law, so they must be paid before the deed goes to the tax office.
• Tax sale. If the lien sheet shows the property was in tax sale, it must be redeemed and signed off by the Tax Sale Section before transfer.
• Homeowners’ Tax Credit. If the lien certificate shows a Homeowners' Tax Credit, the settlement agent must get the proration amount from the city and pay it by separate check to the Director of Finance.

These items are usually paid from the seller’s proceeds at settlement, but check your contract. Our Baltimore City lien certificate guide explains each item and the timing in detail.

Where the deed is taxed and recorded

Recording in the city takes two stops, both downtown. First, the city’s Transfer and Recordation Tax Office in the Abel Wolman Municipal Building on Holliday Street collects the city taxes. The office takes walk-in customers on Mondays and Wednesdays only. Baltimore City uses its own intake sheet (legal size); it has not accepted the Maryland State Intake Sheet since July 1, 2014. City transfer tax, recordation tax and any yield tax each need a separate check.

Second, the deed goes to the Circuit Court for Baltimore City, Land Records and Licenses Division, Clarence M. Mitchell, Jr. Courthouse, Courthouse West, Rooms 610 and 627, 100 North Calvert St., Baltimore, MD 21202, for recording. The city also accepts deeds electronically through Simplifile, an e-recording service. Buyers and sellers do not need to visit either office: your settlement agent handles both after settlement.

Title issues common in the city

Ground rents

Some older city homes sit on ground that is leased, not owned, with a regular ground rent due to the owner of the ground. Ground rent holders must register with SDAT, and SDAT’s online Ground Rent Registry shows whether a property’s ground rent is registered and who holds it. The title search should find any ground rent on the property. Many ground rents can be bought out through an SDAT process called redemption, though a few are irredeemable.

Rowhouses, alleys and old plats

Rowhouses share party walls, and many back onto shared alleys. Deed descriptions written decades ago do not always match today’s fences, additions and parking pads. A survey shows where the lines actually fall, and an owner’s title policy protects you against covered title problems. An owner’s policy is optional in Maryland, and you pay its premium once, at settlement. See why title insurance matters.

Estates and family transfers

When the owner has died, the sale is normally made by the personal representative of the estate once appointed, and that sale is taxed on the price like any other. If the personal representative instead deeds the home to an heir and nothing is paid, the deed is exempt from city transfer tax, though a lien certificate is still required. The city requires a personal representative’s deed to be prepared by an attorney. Our deeds and family transfers service handles this.

Near the water

Every Maryland contract for the sale of real property must include the critical area notice. The critical area generally covers land within 1,000 feet of tidal waters and tidal wetlands, where extra zoning, land use and resource protection rules apply. In the city that can include land near the harbor and the Middle Branch, so check before you plan an addition or a deck.

Sellers who live out of state

A seller who is not a Maryland resident faces state income tax withholding at settlement, unless an exemption applies. For an individual it is 8.75% of the net proceeds paid to the seller, and for a business seller 8.25%. Our nonresident seller withholding guide explains the exemptions.

How Maryland First Title helps

Maryland First Title has provided title and escrow services by attorneys since 1994, across all of Maryland. For a city sale, our attorneys search title, work through the lien certificate and anything it shows, hold the escrow funds and run the settlement. We will meet you anywhere in Maryland at no extra cost, including in the city, hold the meeting online, or host you at our Glen Burnie office at 306 Crain Hwy N. Weekend and after-hours appointments are available. Our owner’s and lender’s title policies are backed by Stewart Title.

For a home purchase or sale, see residential settlements. Investors selling one property to buy another can ask about 1031 exchanges, and owners selling without an agent can use our for sale by owner support.