Maryland recordation tax exemptions are listed in section 12-108 of the Tax-Property Article, which waives all or part of the tax for more than two dozen specific situations, including transfers between spouses and domestic partners, family transfers involving assumed debt, refinancings by the original borrower, transfers to government bodies, and conveyances to qualified land trusts. You have to claim the exemption yourself on the paperwork at recording; it is not applied automatically.
What the Recordation Tax Covers
The recordation tax is an excise tax charged when certain documents are filed in a Maryland county’s land records. It applies to any written instrument that transfers title to real property or creates a security interest, so on a typical home purchase the deed and the mortgage each trigger the tax separately. Rates are set by each county as a dollar figure per $500 (or fraction of $500) of the sale price or the principal amount of secured debt, and they vary noticeably from one jurisdiction to another.
Maryland also charges a separate state transfer tax of 0.5% of the consideration on instruments that convey title or a leasehold interest. That tax does not apply to mortgages or deeds of trust, and it has its own exemption rules. Qualifying for a recordation tax exemption does not automatically excuse you from transfer tax. The exemptions below are the ones in Title 12 of the Tax-Property Article and cover recordation tax only.
Transfers Between Spouses and Domestic Partners
Section 12-108(d) fully exempts any instrument transferring property between spouses, former spouses, domestic partners, or former domestic partners. It applies whether or not a mortgage is involved and regardless of what was paid. Divorce-related deeds, post-separation transfers, and voluntary conveyances between married couples or registered domestic partners all fit here.
Two conditions matter. Domestic partners and former domestic partners must submit evidence of the partnership or its dissolution when the deed is recorded. And while spousal transfers are exempt for any property type, the domestic partner exemption is limited to residential property.
Family Transfers Where a Relative Assumes the Debt
Section 12-108(c) handles a narrower case: property transferred to a family member who takes over an existing mortgage or deed of trust. The recordation tax does not apply to the principal amount of debt the family member assumes. The eligible relationships are broad and include children, stepchildren, parents, stepparents, in-laws, siblings, stepsiblings, grandchildren, stepgrandchildren, grandparents, stepgrandparents, and domestic partners or former domestic partners.
This provision is often misread. It does not wipe out the recordation tax on the whole deed. It waives only the portion tied to the assumed debt. If a parent transfers a home to a child and the child assumes a $200,000 mortgage, no recordation tax is owed on that $200,000. If the child also pays $50,000 in cash, the tax still applies to that $50,000 of consideration. As with the spousal provision, the domestic partner piece of this exemption is limited to residential property.
Refinancing by the Original Mortgagor
Section 12-108(g) keeps homeowners from paying recordation tax twice on the same debt. A new mortgage or deed of trust is exempt to the extent it refinances an amount no greater than the unpaid principal balance of the existing loan at the time of refinancing. Anything above that unpaid balance is treated as new debt and taxed at the standard rate. Refinancing a $250,000 balance into a $300,000 cash-out loan means the first $250,000 is exempt and the remaining $50,000 owes tax.
Only the “original mortgagor” qualifies. The statute defines the term to include the person who first took out the loan, someone who bought the property and assumed the debt while paying recordation tax on the purchase price, and the settlor of a living trust whose trustee is doing the refinancing. If a spouse is added to the new loan alongside the original mortgagor, the exemption still applies.
The Refinancing Affidavit
The exemption requires a sworn statement, placed in the new mortgage’s recitals, in the acknowledgment, or filed as a separate affidavit with the document. It has to confirm that the person is the original mortgagor (or an authorized agent) and state the exact unpaid principal balance being refinanced. If an agent signs, the affidavit must also state that the agent made a diligent inquiry into the facts and that the statement is true to the best of their knowledge.
Transfers Involving Government Entities
Section 12-108(a) exempts any instrument that transfers property to, or grants a security interest to, the United States, the State of Maryland, a state agency, or a political subdivision such as a county or municipality. Routine government acquisitions, infrastructure projects, and intergovernmental transfers move through recording without the tax.
Other Exemptions Worth Knowing
Several less common but useful exemptions round out section 12-108.
Loan Modifications and Supplemental Instruments
Under section 12-108(e), a supplemental instrument of writing is exempt unless it increases the unpaid outstanding principal debt or involves actual new consideration. Modifications that extend a loan’s term or adjust its interest rate without adding to the balance fall inside this exemption, so borrowers are not taxed again on the same debt.
Vehicle and Vessel Liens
Section 12-108(b) exempts security agreements on vehicles perfected through the Motor Vehicle Administration and security agreements on vessels perfected through the Department of Natural Resources. Those liens are recorded in their own systems, not in the land records.
Conservation Easements and Land Trusts
Section 12-108(cc) exempts instruments that convey or assign a conservation easement to a qualifying land trust. It also exempts deeds transferring full ownership to a land trust, as long as the trust files a declaration that the land will be used for preservation, environmental education, agricultural conservation, or wildlife habitat. The trust must be a qualified organization under IRC section 170(h)(3) and hold a cooperative agreement with the Maryland Environmental Trust.
How to Claim an Exemption
An exemption is never granted automatically. You have to assert it in the recording paperwork, and the clerk’s office will check your documentation before accepting the instrument at a reduced rate or without tax.
The Land Instrument Intake Sheet
Every document submitted for recording in Maryland’s land records has to be accompanied by a completed Land Instrument Intake Sheet under Real Property Article section 3-104(g). The intake sheet has a dedicated section for tax exemptions where you list each exemption claimed and cite or briefly explain its legal basis. You submit the original instrument, a photocopy for the State Department of Assessments and Taxation, and all four copies of the intake sheet together.
Where to Record
Recording happens at the Clerk of the Circuit Court in the county where the property is located. Maryland has 23 counties plus Baltimore City, and each clerk’s office handles its own recording. In some jurisdictions the clerk collects the state recordation tax directly; in others the county treasurer collects the state portion first, before you take the documents to the clerk. Confirm with the specific office ahead of time so you know whom to pay and what forms of payment they take.
Supporting Documentation
What you need depends on which exemption you claim. Spousal or domestic partner transfers under section 12-108(d) may require evidence of the partnership or its dissolution. The refinancing exemption requires the sworn affidavit described above. A family transfer under section 12-108(c) should state the relationship between the parties on the deed and identify the mortgage being assumed. Incomplete or unclear documentation is the most common reason a claim gets rejected at the counter, so have the paperwork reviewed before you go in.
Risks of Claiming an Exemption You Do Not Qualify For
Misrepresenting facts on the intake sheet or affidavit can void the exemption after the fact, leaving you liable for the full tax plus interest. Overstating a family relationship, understating the refinanced principal balance, or failing to disclose additional consideration are typical problem areas. Because the affidavit and intake sheet are sworn documents, inaccurate statements carry the same legal weight as any other false statement under oath. Getting the details right at recording is much cheaper than fighting the county about it later.