Transfer & Recordation Taxes in Montgomery County, MD

By
Real Estate Agent with Marcie Sandalow, Compass 301.758.4894

bigstock_Crunching_The_Numbers_On_The_C_1192847

Original Source:  Montgomery County- Transfer & Recordation Taxes

Making your way through a HUD-1 at settlement always feels a little rushed. As a real estate agent, I'm used to it. But if you're only buying and selling a couple of houses in your lifetime, it's not a regular event, and can lead to some head scratching. And the way the new HUD-1 sheets are figured can make even the most astute real estate agent a little fuzzy when it comes to explaining what is what. I recently had such a moment when the subject of transfer and recordation taxes came up.

In Montgomery County, MD, transfer and recordation taxes for purchases are found on lines 1203, 1204, 1205 and 1206 on the HUD-1. Line 1203 is for the purchaser, and lines 1204-6 are for the seller. Typically, these taxes are split evenly between the buyer and the seller. The one exception is for first-time Maryland homebuyers. Their portion of the state transfer tax is waived by the state (think of it as a gift). It is not paid by the seller. Taxes are figured like so:

  • Recordation Tax: $6.90 per thousand*
  • Recordation Tax: $10.00 per thousand on amounts over $500,000 *the first $50,000 used to calculate the recordation tax is exempt if the property is owner occupied
  • State Transfer Tax: 0.5%
  • County Transfer Tax: 1.0%

The typical purchase price on a 3-bedroom brick colonial in my neighborhood of East Bethesda runs around $725,000. This is how the taxes would figure for such a house:

$6.90 x 450 (remember... it's 500K less 50K) = $3,105
$10.00 x 225 (the thousands above 500K) = $2,250 These two figures added together = the total Recordation Tax = $5,355
State Transfer Tax= 0.5% x $725,000 = $3,625
County Transfer Tax = 1.0% x $725,000 = $7,250
$5,355 + $3,625 + $7,250 = $16,230 ÷ 2 = $8,115 (remember, taxes are typically split 50/50).

The total tax comes to roughly 1.1% of the purchase price for both the buyer and the seller.

The exception to this equation is when the purchaser is a first time Maryland homebuyer. When this is the case, the state of Maryland will waive the buyers portion of the state transfer tax. The buyer will save $1,812.50 in this equation, with a total tax obligation of $6,302.50. This sum will show up on line 1203 of the HUD-1.

The seller can expect to see $2,677.50 on line 1206/State recordation tax, $1,812.50 on line 1205/State tax stamps, and $3,625 on line 1204/City/County tax stamps.

Confused yet?

Posted by

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Marcie Sandalow is a realtor with Evers & Company Real Estate, Inc. in Chevy Chase, DC.   
With 15+ years in the business, and a sharp understanding of her client's needs, she serves Buyers and Sellers
in and around Bethesda, Chevy Chase, Washington, DC, Kensington, Rockville, Silver Spring and Takoma Park. 

E-mail:  marcie@bccdcrealestate.com
Cell:  301/758-4894

Website:  BCCDCRealEstate.com and DCHouseSmarts.com

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Nick Pakulla 12/24/2010 04:25 AM
  2. Roy Kelley 12/24/2010 07:24 AM
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Rainmaker
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Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Well Marcie, who wants to look a gift horse in the mouth!  This is a great thing for first time homebuyers in MD to enjoy...wish we had that here...good informational post too!

Dec 02, 2010 01:41 AM #1
Rainer
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Nick Pakulla
Nick Pakulla Mortgage Team Maryland, Virginia, District of Columbia - Rockville, MD
Nick Pakulla Mortgage Team, Lender in MD DC VA

Marcie - thanks for taking the time to spell this out!  I always enjoy walking through the Hud 1's before settlement with the buyers, as the attorneys usually fly through it.

Happy holidays!

-Nick

Dec 24, 2010 04:21 AM #2
Rainmaker
5,382,557
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Very well done post that your buyer clients will appreciate. Merry Christmas!

  Happy Holidays to all!

Dec 24, 2010 07:22 AM #3
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Rainer
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Marcie Sandalow

Bethesda Chevy Chase DC real estate
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