Montgomery County Council Passes Growth Policy
Recordation Tax Increase Goes Into Effect March 1, 2008
At its final voting session on the growth policy for 2007-2009, the Montgomery County Council voted to increase impact taxes, impose new school and transportation adequacy tests, and increase the recordation tax. New revenue from the recordation tax increase will go towards rental assistance programs and County Government capital projects like roads, police, and fire stations. A motion was made to hold off on the recordation tax legislation until the Council begins budget deliberations in May, but ultimately failed. In the final version of the recordation tax increase that was approved:
• Sale price at $500,000 and below – NO increase on the recordation tax
• Sale Price above $500,000 – Rate increase of $3.10/$1,000 only on the additional consideration above $500,000; [i.e. a $700,000 sales price would be charged $6.90/$1000 on $650,000 (because of $50,000 exemption for primary residence), then additional $3.10/$1000 on $200,000 which is the additional increment above $500,000.
Example: Home Price $700,000
Recordation Tax on this home prior to 3/1/08 = $4,485.50
Recoration Tax on this home after 3/1/08 = $4,485.50 + $620.00 = $5105.50
(note: recordation tax is usually split equally between the buyer and the seller)
• Effective Date: March 1, 2008 and applies to any settlement that occurs on or after that date. Any settlement that occurs prior to March 1, 2008 will be subject to the old rates notwithstanding the date the deed is recorded. Contracts written prior to March 1, 2008 but go to settlement on or after March 1, 2008 are subject to the new rates.
What does this mean to you? If you are considering purchasing a home in Montgomery County, in addition to the fantastic interest rates, outstanding inventory from which to choose and buyer negotiating power, this is one additional reason to consider your purchase before the spring market hits.