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Montgomery County Council Passes
Recordation Tax Increase
At its final voting session
on the growth policy for 2007-2009, the County
Council
voted to increase impact taxes, and increase the
real estate
recordation tax. New revenue from the
recordation tax increase
will go towards rental assistance programs and
County Government capital
projects like roads, police, and fire stations.
A motion was made to hold off on the
recordation tax legislation until the Council
begins budget deliberations in May,
but the delay ultimately failed. The final version of
the recordation tax increase that was approved
is as follows:
•
Sale price at $500,000 and below –
NO increase on the recordation tax
• Sale Price above $500,000
– Rate increase of $3.10/$1,000 only on the
additional consideration above $500,000;
[i.e. a $750,000 sales price would be
charged $6.90 per $1000 on $7000,000
(because of $50,000 owner occupied
exemption), then an additional $3.10
per $1000 on $200,000 which is the
additional increment above $500,000, so
essentially an additional $620 on a $750,000
home sale]
• Effective Date: March 1,
2008 and applies to any settlement that
occurs on or after that date. Any settlement
that occurs prior to March 1, 2008 will be
subject to the old rates notwithstanding the
date the deed is recorded. Contracts written
prior to March 1, 2008 but go to settlement
on or after March 1, 2008 are subject to the
new rates.
ΛΛΛΛΛΛΛΛΛΛΛΛΛΛΛΛΛΛΛ
Sample of
the Total Transfer taxes in Montgomery County on
a house priced at $750,000 would look like this:
Sale
Price $750,000.
Montgomery County Transfer Tax 1% of sales price $7,500
Maryland State Transfer Tax 1/2% of sales price: $3,750
Montgomery County Recordation Tax with new
surcharge
$5,450
Total Transfer
Taxes in Montgomery County
$16,700
New Recordation Tax computed as follows....
6.90
per $1000 of sales price.
Plus new additional surcharge of $3.10
for any amount over $500,000.
If property is owner occupied, deduct the
$50,000
from the total sales price.
Example: Sales price $750,000.
Deduct $50,000 if the property is owner
occupied.
Multiply $700,000 by 6.90 per $1000 = $4,830
To compute surcharge...
Multiply $200,000 (the amount over $500,000)
by
$3.10 per $1,000 then add to first amount.
Surcharge would be:$620.
Total amount is $4,830 + $620 = $ 5450
* * * Note that it is customary
for seller and buyer to split the transfer taxes
50/50 unless otherwise negotiated in the sales
contract.
* * * With new home sales, the
builder does not split transfer taxes.
The buyer
pays 100%.
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