Sticker shock at closing is no fun. If you are buying or selling in Montgomery County, you have likely heard about both transfer tax and recordation tax and wondered why there are two. You are not alone, and a little clarity goes a long way in budgeting with confidence. In this guide, you will learn what each tax is, the current Montgomery County rates, how the post–Oct 1, 2023 recordation tiers work, common exemptions, and simple examples you can follow. Let’s dive in.
Transfer tax vs. recordation tax
Transfer tax is charged on the transfer of real property, usually based on the purchase price or consideration. Maryland imposes a statewide transfer tax on deeds, and many counties add a local transfer tax that is collected at closing. You can review the state’s overview of transfer taxes and related fees in the Maryland Courts guidance for clerks and consumers (state transfer tax basics).
Recordation tax is a separate excise tax on documents recorded in land records. It applies to deeds and to instruments that secure debt, like mortgages or deeds of trust. Montgomery County sets its recordation tax by ordinance, calculated per $500 or fraction of consideration or principal amount (county code framework).
Current Montgomery County rates
State and county transfer taxes
- Maryland state transfer tax: 0.50% of the purchase price on deeds, with a reduced 0.25% for qualifying first‑time Maryland homebuyers purchasing a principal residence (state rate and first‑time reduction).
- Montgomery County transfer tax: 1.00% of the purchase price, applied in addition to the state tax unless an exemption applies (county rate summary).
Recordation tax tiers after Oct 1, 2023
Montgomery County uses a tiered, marginal structure created by Bill 17‑23. Rates are charged per $500 unit in each price slice, then summed. The county explains the change and allocations on its finance page (Bill 17‑23 overview).
- First $500,000 of consideration: $4.45 per $500, about 0.89% on that slice (rate structure).
- $500,000.01 to $600,000: $6.75 per $500, about 1.35% on that slice (premium tiers).
- $600,000.01 to $750,000: $10.20 per $500, about 2.04% on that slice.
- $750,000.01 to $1,000,000: $10.78 per $500, about 2.156% on that slice.
- Amounts above $1,000,000: $11.35 per $500, about 2.27% on that slice.
Note: Montgomery County calculates recordation tax per $500 or fraction. That means any partial $500 is rounded up and taxed as a full $500 unit (rounding rule in code).
How to calculate your recordation tax
- Break your price into the five slices above.
- Convert each slice into $500 units and multiply by the per‑$500 rate for that slice.
- Add the results across slices for the total recordation tax.
Example at $650,000
- First $500,000: 1,000 units × $4.45 = $4,450.
- $500,000 to $600,000: 200 units × $6.75 = $1,350.
- $600,000 to $650,000: 100 units × $10.20 = $1,020.
- Recordation total = $6,820.
- Transfer taxes: county 1.00% = $6,500; state 0.50% = $3,250; combined transfers = $9,750.
- Combined recordation plus transfer taxes = $16,570.
- If you qualify for the state first‑time buyer rate, the state portion becomes 0.25% ($1,625), and the combined total becomes $14,945 (first‑time buyer reduction).
Example at $1,500,000
- First $500,000: 1,000 units × $4.45 = $4,450.
- $500,000 to $600,000: 200 units × $6.75 = $1,350.
- $600,000 to $750,000: 300 units × $10.20 = $3,060.
- $750,000 to $1,000,000: 500 units × $10.78 = $5,390.
- $1,000,000 to $1,500,000: 1,000 units × $11.35 = $11,350.
- Recordation total = $25,600.
- Transfer taxes: county 1.00% = $15,000; state 0.50% = $7,500; combined transfers = $22,500.
- Combined recordation plus transfer taxes = $48,100.
These figures are illustrative only. Your final amounts depend on your exact price, loan amount, exemptions, and official county calculations.
Exemptions and special cases to know
First‑time Maryland homebuyer
Qualifying first‑time Maryland homebuyers who will occupy the home as a principal residence can receive a reduced state transfer tax of 0.25% instead of 0.50%. An affidavit is required at closing (state guidance).
Family transfers and other statutory exemptions
Maryland Tax‑Property law lists many exemptions, including certain transfers between spouses and close relatives, transfers to public agencies, some entity reorganizations, and more. Exemptions are specific and require proper documentation (see statute summary).
When your loan is larger than the price
Recordation tax also applies to recorded debt. If the principal amount of your mortgage or deed of trust is higher than the purchase price, the tax is imposed on the larger loan amount (county code rule).
Transfers of controlling interests in entities
A transfer of a controlling interest in a real property entity can trigger transfer and recordation taxes as if the property had been conveyed by deed. Reporting to the Maryland Department of Assessments and Taxation may be required (DAT guidance).
Agricultural land changes in use
Agricultural land that changes use can be subject to separate surcharges or excise. If this may apply to your property, consult the county’s agricultural services resources for guidance (agriculture FAQs).
Practical closing details in Montgomery County
Who pays, when, and how
Payment is set by your contract and collected by the settlement agent. Transfer and recordation taxes, plus recording fees, are due before or at the time the documents are recorded. Montgomery County supports electronic submission and payment through its transfer and recording systems, with current procedures posted by the Department of Finance (payment and e‑recording info).
Recording fees and surcharges
In addition to taxes, most recorded documents include a state surcharge and county recording fees. Montgomery County guidance notes a $20 recording fee for most deeds of 9 pages or less for principal residences, $75 for deeds of 10 pages or more, and a $40 surcharge for most recorded documents. Always confirm the latest fee schedule before closing (land records guidance).
Getting an exact number
Your title or settlement company will compute the taxes and fees for your specific transaction. Provide your purchase price, loan amount, intended occupancy, and any potential exemptions so they can produce an accurate quote. The county’s finance pages also outline where to direct administrative questions (finance FAQs).
Plan ahead at higher price points
Because Montgomery County’s recordation tax is tiered, higher price slices are taxed at higher marginal rates. If you are shopping or listing in these ranges, build the impact into your closing cost plan or net sheet early. The county explains how premium revenue is allocated to schools, county capital projects, and housing initiatives in the Bill 17‑23 materials (premium allocation overview).
When you want a clear, transaction‑specific estimate and a strategy that fits your goals, reach out to the team that treats details like these as mission‑critical. Connect with Dalys Keith to get aligned on next steps.
FAQs
What are the transfer taxes on a Montgomery County home purchase?
- Expect 1.00% county transfer tax plus 0.50% Maryland state transfer tax, or 0.25% state tax if you qualify as a first‑time Maryland homebuyer purchasing a principal residence (rate details and county rate summary).
How do the 2023 recordation tax tiers work in Montgomery County?
- The county charges per $500 in price within each tier, then adds the results; marginal rates increase at $500k, $600k, $750k, and $1M (county overview).
Does recordation tax apply to my mortgage amount?
- Yes, the tax applies to the principal amount of recorded debt, and if your loan is higher than the purchase price the higher amount can control the tax base (county code rule).
Are there exemptions for family transfers in Maryland?
- Some transfers between spouses and close relatives, as well as other statutory situations, can be exempt with proper documentation; review the statute and consult your settlement agent for specifics (statute summary).
Who gives an exact tax quote before closing in Montgomery County?
- Your title or settlement company calculates taxes and fees using your price, loan amount, occupancy, and any exemptions, and the county finance office provides administrative guidance on filings and payments (finance FAQs).
