Howard County Transfer Tax: Rates, Who Pays, and Exemptions

The Howard County transfer tax is 1.25% of the sale price, and it is only one of three percentage-based charges that hit at closing. On top of it, the county collects a recordation tax of $2.50 per $500 of consideration (effectively 0.5%), and Maryland adds a state transfer tax of 0.5%. On a $500,000 sale, those three taxes together come to roughly $11,250 before any exemption applies. All of it is collected before the Clerk of the Circuit Court will record the deed.¹

The Three Taxes on a Howard County Sale

Since July 1, 2020, the county transfer tax rate has been 1.25% of the actual consideration paid, meaning the purchase price stated in the deed plus any assumed debt.¹ Older calculators and settlement worksheets sometimes still show the earlier 1.0% rate, so double-check the source of any estimate you were given.

The county recordation tax is separate. It runs $2.50 for every $500 (or fraction of $500) of consideration, which works out to 0.5% of the price.² Maryland’s state transfer tax adds another 0.5% of the price on top.³

Here is what that looks like on a $500,000 sale with no exemptions:

County transfer tax (1.25%): $6,250
County recordation tax on the deed (0.5%): $2,500
State transfer tax (0.5%): $2,500
Total percentage-based taxes: $11,250

Flat recording fees, title insurance, and settlement charges sit on top of that number.

Recordation Tax on the Mortgage

Recordation tax also applies to instruments that create a security interest, which means your mortgage or deed of trust gets taxed too. That charge is calculated on the loan amount, not the purchase price. On a $500,000 home financed with a $400,000 loan, you owe recordation tax on the deed ($2,500) plus recordation tax on the mortgage ($2,000), for $4,500 in recordation tax alone.² Combined with the transfer taxes, the total percentage-based bill on that transaction runs $13,250.

If you are refinancing rather than buying, the recordation tax does not apply to the portion of the new loan that replaces the unpaid principal of the old one. You owe recordation tax only on any amount above the existing balance, and you have to include a sworn statement identifying that outstanding principal.⁴

Who Pays

Maryland’s default rule splits the three taxes 50/50 between buyer and seller.⁵ That default rarely controls in practice, though, because almost every purchase contract allocates the taxes differently. Read your contract; whatever it says is what governs.

There is one allocation the contract cannot override. When the buyer qualifies as a first-time Maryland homebuyer purchasing improved residential property as a principal residence, the seller must pay the entire state transfer tax at the reduced 0.25% rate. No contract clause can shift that piece to the buyer.³ The seller is also presumed to pay the recordation tax and the county transfer tax in that situation, but for those two the parties can agree to a different split.⁵

A “first-time Maryland homebuyer” is someone who has never owned residential real property in Maryland that served as a principal residence.

Exemptions and Reduced Rates

First-Time Howard County Homebuyers

First-time Howard County homebuyers are fully exempt from the 1.25% county transfer tax on a purchase of residential property. On a $500,000 home, that alone saves $6,250. The buyer has to complete the county’s Transfer Tax Exemption Affidavit and submit it with the deed to the Office of Finance.⁶

Layered with the state’s first-time-buyer reduction (0.25%, paid by the seller) plus the recordation tax, a first-time buyer on a $500,000 home avoids the county transfer tax entirely, and the state transfer tax portion drops to $1,250, paid by the seller.

Teachers, Police, and Fire and Rescue

Three groups of Howard County public employees get their own break: certificated professional teachers employed by the Howard County Board of Education, Howard County police officers and deputy sheriffs, and Howard County fire and rescue services members. On a first Howard County home purchase, these buyers pay no county transfer tax. On a second or later purchase, the rate drops to 0.7% instead of 1.25%.⁷

The property must be a principal residence, and the buyer must stay in the qualifying job for at least three years after purchase. If you leave the position or move out before three years are up, you have to notify the Howard County Office of Finance within seven working days and pay back the tax you would have owed.⁶

Family and Entity Transfers

Transfers between spouses or from a parent to a child where little or no money changes hands may qualify for a transfer tax exemption. So can transfers from an individual to a wholly owned business entity when the arrangement meets the statutory requirements. These provisions keep non-market transfers from being taxed like an arm’s-length sale.

Agricultural Land Conversion

If you are buying farmland that will stay in agricultural use, the ordinary transfer and recordation taxes are what you deal with. If land previously assessed for agricultural use is being converted to another use, a separate state agricultural transfer tax applies on top:

20 acres or more: 5% of the net consideration
Under 20 acres, unimproved: 4%
Under 20 acres with site improvements such as a well or septic: 3%

A 25% surcharge is calculated on the agricultural transfer tax amount, though transfers of two acres or less to a child or grandchild of the owner are exempt from the surcharge. Howard County may also impose its own county-level agricultural transfer tax. Net consideration subtracts the value of dwellings, structures, and non-agricultural land from the total price.⁸

Nonresident Seller Withholding

If you are selling and you do not live in Maryland, the settlement agent must withhold Maryland income tax from your proceeds and file it with the Clerk at recording. The rate is 8.75% of the net payment (sale price minus liens, commissions, and expenses) for individuals, and 8.25% for business entities.⁹ This is not a separate transfer tax. It is a prepayment of state income tax on the gain, and the seller claims a credit for it when filing a Maryland nonresident return.

Paying the Tax and Recording the Deed

Recording a deed in Howard County is a two-step process. You bring the documents first to the Howard County Office of Finance, which verifies the tax calculation, accepts payment, and stamps the deed to confirm the county taxes have been paid. Then you take the stamped deed to the Land Records Office of the Clerk of the Circuit Court for official recording. Without the Finance stamp, the Clerk will not accept the deed.²

You will need the original deed, a completed Maryland Land Instrument Intake Sheet, and the SDAT property identification number. The consideration on the deed and intake sheet drives every tax calculation, so those numbers need to be accurate. Party names and the property account number have to match current tax records, or the submission will be rejected.

Flat Recording Fees

On top of the percentage-based taxes, the Clerk charges flat fees:²

Deed or mortgage, 9 pages or fewer: $20
Instrument of 10 pages or more: $75
Release, 9 pages or fewer: $10
Surcharge on most instruments: $40

A typical deed recording runs $60: the $20 filing fee plus the $40 surcharge. Small numbers next to the tax bill, but part of your closing costs all the same.

1
Howard County. Recordation Tax
2
Maryland Courts. Circuit Court for Howard County, MD – Land Records Department
3
Maryland General Assembly. Maryland Tax-Property Article 13-203
4
Maryland General Assembly. Maryland Tax-Property Article 12-108
5
New York Codes, Rules and Regulations. Maryland Code Real Property 14-104 – Recordation and Transfer Taxes
6
Howard County. Howard County – Transfer Tax Exemption and Rate Reduction
7
Maryland General Assembly. Maryland Code – Chapter 138 (House Bill 223)
8
Maryland Department of Assessments and Taxation. Agricultural Transfer Tax
9
Comptroller of Maryland. Maryland Return of Income Tax Withholding for Nonresident Sale of Real Property