The Maryland real estate transfer tax is a 0.5% state charge on the sale price, plus a county transfer tax that ranges from 0% to 1.5% depending on where the property sits. A separate recordation tax applies to the deed and any new mortgage, so the total tax at closing is usually larger than the headline transfer tax rate suggests. First-time Maryland homebuyers pay a reduced state rate of 0.25%, and by statute the seller covers that entire amount.
The State Rate and What It Applies To
The state transfer tax is 0.5% of the consideration paid for the property.1Maryland General Assembly. Maryland Code Tax – Property 13-203 – Rate of Tax Consideration is broader than the contract price: it includes any existing mortgage or deed-of-trust debt the buyer assumes from the seller. On a $400,000 purchase, the state tax is $2,000. On a $600,000 purchase where the buyer takes over a $150,000 existing loan, consideration is still $600,000 and the state tax is $3,000.
When a deed doesn’t state a price, the tax is calculated from the property’s fair market value in the state’s assessment records. That situation typically comes up with gifts or transfers between related parties that don’t qualify for an exemption.
County Transfer Tax Rates
Each county sets its own local transfer tax through county law, and the spread across Maryland is wide.2Department of Legislative Services. Local Tax Rates in Maryland For FY 2026:
- No county transfer tax: Calvert, Carroll, Frederick, Somerset, and Wicomico
- 0.5%: Allegany, Caroline, Cecil, Charles, Kent, Queen Anne’s, Washington, and Worcester
- 0.75%: Dorchester
- 1.0%: Garrett, Harford, St. Mary’s, and Talbot
- 1.0% to 1.5%: Anne Arundel, where a 0.5% surcharge applies once the price hits $1 million3Anne Arundel County Government. Recordation and Transfer Tax
- 1.25%: Howard
- 1.4%: Prince George’s
- 1.5%: Baltimore City and Baltimore County
- Variable by value and property type: Montgomery
The location matters more than most buyers expect. A $500,000 sale in Frederick County produces no county transfer tax, while the same sale in Baltimore County generates $7,500 in county tax on top of the $2,500 state tax. Confirm the current rate with the county finance office before you rely on any estimate; local rates can shift with the budget cycle.
Recordation Tax
Recordation tax is a separate charge that applies to every deed, mortgage, or deed of trust filed in Maryland land records. It’s paid at the same time as the transfer tax and calculated per $500 of consideration, rounded up to the next $500.4Maryland General Assembly. Maryland Code Tax – Property 12-103 – Rate of Tax Counties set the rate.
Baltimore and Howard counties sit at the low end at $2.50 per $500. Charles and Frederick counties charge $7.00 per $500. On a $400,000 purchase, the low rate produces a $2,000 recordation tax; the high rate produces $5,600. Montgomery County uses a tiered structure starting at $4.45 per $500 on the first $500,000 and rising above that. Prince George’s County layers additional mortgage-related taxes on top of the standard recordation tax.
Financed purchases pay recordation tax twice: once on the deed based on the purchase price, and once on the mortgage based on the loan amount. That’s where closing costs climb in the higher-rate counties.
Who Pays
Maryland law’s default is an even split of recordation and transfer taxes between buyer and seller, unless the contract says otherwise.5New York Codes, Rules and Regulations. Maryland Code Real Property 14-104 – Recordation and Transfer Taxes In practice the contract almost always addresses the split, and the standard Maryland residential contract has spaces for the parties to allocate it. In a competitive market, buyers sometimes offer to shoulder more to strengthen their bid.
Commercial deals negotiate the allocation heavily, and large transactions frequently push the whole cost onto the buyer. Foreclosure buyers should assume they’ll cover the full amount, since lenders rarely agree to pay any share. The 50/50 rule is just a starting point; the contract controls.
The First-Time Homebuyer Break
First-time Maryland buyers get two things. The state transfer tax rate is halved to 0.25%, and the seller must pay that entire reduced amount.1Maryland General Assembly. Maryland Code Tax – Property 13-203 – Rate of Tax On a $400,000 purchase, that drops the state tax from $2,000 to $1,000, and the buyer owes none of it.
The seller-pays rule extends further. The seller also pays the full recordation tax and full county transfer tax on a first-time buyer transaction, unless the contract expressly reassigns those charges.5New York Codes, Rules and Regulations. Maryland Code Real Property 14-104 – Recordation and Transfer Taxes The state transfer tax piece can never be shifted back to the buyer. The recordation and local transfer tax pieces can be, but only with explicit contract language. Sellers sometimes insist on that carve-out, so read the contract closely.
To qualify, you must never have owned residential property in Maryland used as your primary residence. The property being purchased has to be improved residential real estate, and you must intend to make it your principal residence. Every buyer on the deed has to meet the criteria, with a narrow carve-out for mortgage co-signers who won’t live there. You’ll sign a sworn statement of eligibility before recording.1Maryland General Assembly. Maryland Code Tax – Property 13-203 – Rate of Tax Tax sale purchases don’t qualify.
Common Exemptions
Maryland’s transfer tax exemptions under Tax-Property ยง 13-207 mirror the recordation tax exemptions. If a transaction is exempt from one, it’s exempt from both.6Maryland General Assembly. Maryland Code Tax – Property 13-207 – Exemptions From Transfer Tax
Family Transfers
When property passes between close relatives and one of them assumes the existing mortgage, no recordation or transfer tax is due on the principal balance of that assumed loan. Qualifying relationships include spouses, former spouses, parents, children, siblings, grandparents, grandchildren, in-laws, stepfamily, and domestic partners.7Maryland General Assembly. Maryland Code Tax – Property 12-108 – Exemptions From Tax The domestic partner exemption applies only to residential property. Expect to provide proof of the relationship, and for domestic partnerships, documentation of the partnership or its dissolution.
Trust Transfers
Moving real property into a trust without consideration is exempt from recordation tax, transfer tax, and any other state or local excise tax.8Maryland General Assembly. Maryland Code Estates and Trusts 14.5-1001 – Imposition of Taxes on Transfer of Real Property Transfers out of a trust to beneficiaries are also exempt in three situations: when the beneficiary would have been exempt taking directly from the original owner, when the transfer occurs during the original owner’s lifetime and the trustee paid full consideration, or when a revocable trust distributes property after the settlor’s death. This is the exemption that covers deeding your home into your own revocable living trust for estate planning.
Refinancing
A refinance triggers no transfer tax because ownership doesn’t change. The new mortgage would ordinarily owe recordation tax, but Maryland exempts the refinanced amount up to the unpaid principal balance of the existing loan.7Maryland General Assembly. Maryland Code Tax – Property 12-108 – Exemptions From Tax Cash-out refinances owe recordation tax only on the amount above the current balance. The mortgage document has to include a sworn statement identifying the original borrower and the outstanding balance being refinanced.
Business Entity and Other Exemptions
Additional exemptions cover transfers between related business entities, corporate and partnership conveyances, mergers, consolidations, and conversions to an LLC from a predecessor entity.6Maryland General Assembly. Maryland Code Tax – Property 13-207 – Exemptions From Transfer Tax The list also reaches transfers involving government agencies, land installment contracts, leases of seven years or less, cooperative housing corporations, and properties surrendered in bankruptcy. Nonprofits acquiring agricultural land to preserve its farming character can qualify if they meet certification requirements from the Department of Assessments and Taxation.
Agricultural Land Transfer Tax
A separate tax applies when farmland assessed for agricultural use is sold for non-agricultural purposes. The rates are high and scale with parcel size:9Maryland General Assembly. Maryland Code Tax – Property 13-303 – Rate of Tax
- 20 acres or more: 5% of the consideration
- Under 20 acres, unimproved: 4%
- Under 20 acres, improved or with site improvements: 3%
A 25-acre parcel sold for $1 million would owe $50,000 in agricultural transfer tax on top of the regular state and county transfer taxes. The rates decrease if the land was already being taxed at non-agricultural assessment rates for one or more years before the sale.
Buyers planning to keep the land in farming can avoid this tax by filing a declaration of intent before the transfer.10New York Codes, Rules and Regulations. Maryland Code Tax – Property 13-305 – Exemptions The declaration commits the buyer to farming the land for at least five consecutive tax years and to applying for agricultural use assessment. Breaking that commitment by building non-farm structures or losing the agricultural assessment triggers the full tax plus a 10% penalty, which becomes a lien on the land.
Federal Income Tax Treatment
Transfer taxes are not deductible on your federal return as real estate taxes. The IRS specifically excludes them from deductible property taxes.11Internal Revenue Service. Publication 530, Tax Information for Homeowners A buyer adds transfer taxes to the cost basis of the property, which reduces taxable gain on a future sale. A seller treats transfer taxes paid at closing as a selling expense, which reduces net proceeds for capital gains purposes.