Below: the default rule, what a contract can change, the exception for first-time Maryland home buyers, and a few local twists. For the rates themselves, see our calculator, where you can work out the taxes on your own price.
The default rule: half each
Real Property 14-104 sets the starting point. Recordation tax and state and county transfer taxes are presumed to be shared equally between buyer and seller unless the contract says otherwise. The rule covers all three taxes a Maryland deed pays:
- State transfer tax: 0.5% of the price.
- County transfer tax: set by each county or Baltimore City. Calvert County charges none.
- Recordation tax: a set amount for each $500 of the price, also set locally.
What the contract can change
The even split is a default, not a requirement. A sales contract can give either side more or all of the taxes, and many Maryland contracts and addenda say something about them. Read the tax clause, and any addendum that changes it, before you sign. If you are negotiating, the transfer taxes are one of the costs that can be traded like any other term.
What a contract cannot change is the first-time buyer rule for the state transfer tax, below.
The first-time buyer exception
When every buyer is a first-time Maryland home buyer who will live in the home, and each signs a sworn statement saying so, the law shifts the taxes to the seller:
- State transfer tax: the rate drops to 0.25% of the price, and the seller pays all of it, whatever the contract says.
- County transfer tax and recordation tax: the seller pays them too, unless the contract expressly says the buyer pays.
A buyer who has owned and lived in a Maryland home before does not qualify, and every person taking title has to qualify (or be only a co-signer or guarantor of the loan who will not live there). Our first-time buyer transfer tax guide covers who counts and how the counties differ.
A local twist: owner-occupants in Baltimore City
Baltimore City takes the first $22,000 of the price off the city recordation tax when the buyer will live in the home, and off the city transfer tax too when the price is under $250,000. Under the city code, that saving goes to the buyer unless the seller is paying the whole tax. Baltimore County leaves the first $22,000 of the price out of its county transfer tax for a buyer’s principal residence; ask us how that saving is shared on your sale.
A worked example
Take an Anne Arundel County home at the county’s median sale price, $509,990. The three taxes come to $11,219.85: state transfer tax $2,549.95, county transfer tax $5,099.90 and recordation tax $3,570.
- Contract silent, ordinary buyer: the buyer pays $5,609.92 and the seller $5,609.93.
- Contract silent, first-time Maryland buyers who will live in the home: the state transfer tax falls to $1,274.98, and the seller pays it along with the county transfer tax and the recordation tax. The buyer’s share of the three taxes is $0.
Money at settlement that is not split
- The buyer’s loan. On a purchase, the buyer’s mortgage or deed of trust does not normally bring a second recordation tax bill, as long as it meets the statute’s conditions for a purchase-money loan.
- Nonresident withholding. When the seller does not live in Maryland, state income tax is generally withheld from the sale. It comes out of the seller’s proceeds; the buyer does not pay it. See nonresident seller withholding.
- Everything else. Title insurance, the settlement fee, lender charges and recording fees are separate from the taxes, and the contract and the loan decide who pays them.
Where you will see the split
The settlement statement lists each tax and which side pays it, and a buyer with a loan sees the same lines on the Closing Disclosure, which the lender must deliver at least three business days before the loan closes. Compare those lines with your contract. A tax the contract gives to the other side should not be in your column.
How we help
Our settlements are led by attorneys. We read the tax clause in your contract, take the first-time buyer statements where they apply, show each tax and who pays it on the settlement statement, pay the taxes at settlement and send the deed for recording in the county where the home is. You can settle at our Glen Burnie office, or we come to you anywhere in Maryland at no extra cost. For a purchase or sale, see our residential settlements.