Looking to buy a North Potomac home? Know about transfer taxes!

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Real Estate Broker/Owner with got agent? MD 636504

Have you finally made a decision and are now looking to buy a North Potomac home?  You're in good company.  Many buyers like North Potomac and all that the area has to offer.  There are lots of diverse subdivisions to suit any lifestyle.  Finding that right home takes a bit of work, but it's very doable- especially if you've chosen to work with a North Potomac real estate agent that has lots of experience that you can benefit from.

 

When I first start working with buyers who are looking to buy a North Potomac home, I make sure that they understand closing costs and how those costs impact their purchase.  A good rule of thumb when roughly calculating closing costs is to use 3% to 4% of the price of the home.  So, you not only need a down payment in order to buy a home, you also need another 3% to 4% of the price to cover the closing costs.

Why are closing costs so high and what are the individual costs?  There are lots of line items that can include inspection costs, location survey, lender fees, title/escrow fees, Owner's title insurance policy, Lender's title insurance policy, appraisal, monies held in an "escrow" account by the lender to cover your property taxes and homeowners insurance payments and a few others.  The one that I didn't mention is taxes.

If you're looking to buy a North Potomac home, you need to know about transfer taxes

What's that saying about taxes?  The only two things in life that are certain are death and taxes.  Yes, even when you're looking to buy a North Potomac home, there are taxes involved.  There are three taxes in Montgomery County and it's very customary that they're split 50/50 between the Buyer and the Seller because they're substantial.  Here they are before being split:

Montgomery County Transfer Tax: 1% of selling price
State Transfer Tax: .5% of selling price (buyers buying for very first time in Maryland are exempt from this one).
State Recordation Tax: $8.90 per $1,000 up to $500,000 plus $13.50 per $1,000 for any portion over $500,000.

Oh, but wait!  There's a whopping $890 savings if the home is going to be the Buyer's principal residence.  And who said that the government isn't benevolent???? :)

So, this means that if you're looking to buy a North Potomac home for $800,000, the total transfer taxes will be $19,610.00 before being split 50/50.   Now do you see why they are normally shared between the buyer and seller?

Here's another explanation of these taxes and how they recently increased in Sept. 2016.

I make sure that my clients know what their closing costs are going to total well before we go to the settlement table.  When you're talking these kinds of numbers, there's no room for guesswork.  If you're looking to buy a North Potomac home- give me a call at 240-234-1000.

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Rainmaker
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Les & Sarah Oswald
Realty One Group - Eastvale, CA
Broker, Realtor and Investor

Buyers are in good hands when they work with you. That is a very detailed and informative resource for buyers.

Oct 18, 2016 04:25 AM #1
Rainer
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Jamie Flournoy
got agent? - Gaithersburg, MD

Thanks for your kind words Les and Sarah!

Oct 18, 2016 04:27 AM #2
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Rainer
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Jamie Flournoy

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