Recordation Taxes Increase for Montgomery County, MD Home Buyers & Sellers

By
Real Estate Agent with Thompson Company, REALTORS® MD594797
https://activerain.com/droplet/4SgD

Looking to buy or sell in Montgomery County, MD? Then you should be aware of a couple of big changes that are coming soon and that will impact your closing costs!

Recordation Taxes Increase for Montgomery County, MD Home Buyers and Sellers

Silver Spring, MD Homes For SaleThe Montgomery County Council just - unanimously and unimpressed by REALTOR® protests - voted to raise recordation taxes on the purchase and refinance of Real Estate in the county. Starting September 1st, 2016, the recordation tax will be 0.89% for the first $500,000 and 1.35% for any amount over 500K. The good news is that the first 100K are exempt IF the home is going to be a principal residence - that's double the current exemption. 

It's customary for the transfer and recordation taxes to be split 50/50 between buyers and sellers. Thus, this change will impact the bottom line of both parties.

How much are Recordation Taxes increasing?

Currently, the recordation tax is imposed on $200,000 of a $250,000 property at 0.69% - that's $1,380 or $690 for each, buyer and seller. For a $500,00 house that tax amounts to $3,105 or $1,552.50 respectively.

Starting September 1st, 2016, the tax will increase to 0.89% for properties up to 500K and 1.35% for any amount over 500K. That means that each party, buyer and seller, will be paying $22.50 less on a 250K property but $227.50 more on a 500K property.

The higher the price, the bigger the impact! On a $750,000 house the increase will be more significant:

Until August 31st buyers and sellers will be paying $2,802.50 each. Starting September 1st each will be paying $3,467.50, an increase of $665 for each party. That's no pocket change.

Considering that there are no detached single family homes for under 250K in Montgomery County and the average sales price for all detached homes in 2015 was $659,000, this change will increase the closing costs for many Montgomery County home buyers and sellers. 

Recordation taxes are in addition to State and county transfer taxes which are 1/2% of the sales price to the State of Maryland (1st Time MD Home Buyers are exempt) and 1% of the sales price to Montgomery County.

Furthermore, the Montgomery County Council also voted to increase the property tax rate by 8.7% (NOT a typo) for the 2017 fiscal year!

Stay tuned for another big change coming soon for Montgomery County Home Sellers

Posted by

ANDREA BEDARD, M.A. ~ THOMPSON COMPANY, REALTORS ~

 

 

   

                                                                                                              

 

Thompson Company, REALTORS
16910 Oak Hill Rd, Silver Spring, MD 20905
o: (301) 384-9177 c: (240)593-2860

andreabedard.re@gmail.com

Andrea is a REALTOR® based in Silver Spring, MD. She has enjoyed assisting buyers and sellers since 2004 and focuses on residential Real Estate in  Montgomery and Howard County, MD. Andrea is a proud mom and hobby decorator with a vintage soul. She always answers the phone with a smile, enjoys running and treasure hunting and is addicted to coffee.

 

 All photographs are my own and I'd like to keep it that way. All information is deemed reliable but not guaranteed.

 

 

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Rainmaker
2,704,514
Lisa Von Domek
Lisa Von Domek Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

But the economy is so healthy Andrea Bedard why would they need to impose such large tax increases? 

Jun 07, 2016 11:29 AM #1
Ambassador
2,854,678
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

We have transfer tax ($1 per thousand) and intangible tax if there is a loan on the amount of the loan of $3 per thousand) 

what exactly is a recordation tax?  not something we have here.

Jun 07, 2016 02:36 PM #2
Rainmaker
706,439
Andrea Bedard
Thompson Company, REALTORS® - Silver Spring, MD
M.A.; REALTOR® Silver Spring, MD and beyond

It's much easier to increase taxes than to do the work and look for savings/improvements Lisa Von Domek!

Tammy Lankford, the recordation tax is due for ["the privilege of"] recording a written instrument. Unfortunately, Maryland taxes the purchase, transfer and refinance of properties heavily.

Jun 07, 2016 11:17 PM #3
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Rainmaker
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Andrea Bedard

M.A.; REALTOR® Silver Spring, MD and beyond
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