Maryland Transfer & Recordation Taxes, Explained

Are you budgeting for a home purchase or sale in Annapolis and wondering why transfer and recordation taxes show up on your closing sheet? You are not alone. These line items can be confusing, and the amounts differ by location. In this guide, you will learn what these taxes are, how they are calculated, who typically pays them, and how to estimate your numbers with confidence. Let’s dive in.

What these taxes are

Transfer tax is a tax tied to the conveyance of real property when a deed is recorded. In Maryland, there is a state transfer tax and often a county or municipal transfer tax layered on top. The tax is usually calculated on the consideration shown on the deed, which is commonly the sale price.

Recordation tax is typically charged when documents are recorded in land records. In practice, it most often applies to mortgage or deed of trust instruments tied to your purchase or refinance. Some jurisdictions may also apply recordation to the deed or add local surcharges.

The practical difference is straightforward. Transfer tax tracks the sale itself. Recordation tax often follows the mortgage you use to finance it. Your title company collects and remits both at recording.

How Maryland calculates them

You will see two levels of taxation in Maryland: state plus county or city. The exact combined rate depends on the property’s location.

• Transfer tax base: usually the sale price on the deed.
• Recordation tax base: typically the loan amount recorded against the property.

Use these general formulas with the current local rates:

• Transfer tax = sale price × (state rate + county rate + city rate, if any).
• Recordation tax on mortgage = loan amount × applicable recordation rate(s).
• Total taxes at closing = transfer tax on the deed + recordation tax on any mortgage.

Annapolis vs. Anne Arundel County

Location inside the City of Annapolis can change the combined rate compared to properties in unincorporated Anne Arundel County. Cities may impose their own transfer tax or set special rate rules. Always confirm whether the address is inside Annapolis city limits before you calculate.

Who typically pays in our area

In Maryland, payment is negotiable and set by the contract. There is no statewide rule that one side must pay.

• Transfer tax on the deed: Many local deals have the seller paying this, though it is commonly split or shifted in negotiation. Customs vary by market, and terms change based on leverage.
• Recordation tax on the mortgage: The borrower typically pays this because it is a tax on the loan instrument. This is still negotiable and can be offset by seller credits.
• Cash purchases: No mortgage means no mortgage recordation tax. Deed transfer taxes still apply.

To avoid surprises, make sure the contract and settlement instructions clearly state who pays each tax.

Hypothetical examples to budget

These examples are for illustration only. Replace the rates with the current state, county, and city figures for your exact property.

• Assumptions for all examples (hypothetical): combined deed transfer tax = 1.00 percent of sale price. Recordation tax on mortgage = 0.50 percent of the loan amount.

Example 1: Buyer with a loan

• Purchase price: $500,000
• Transfer tax on deed: $500,000 × 1.00 percent = $5,000
• Loan amount: $400,000
• Recordation tax on mortgage: $400,000 × 0.50 percent = $2,000
• Total at closing for these two taxes: $7,000, plus standard recording and clerical fees

Example 2: Negotiated split

• Same assumptions. If the seller covers the deed transfer tax and the buyer covers the mortgage recordation tax:
• Seller pays $5,000. Buyer pays $2,000.

Example 3: Refinance

• Refinance loan: $350,000
• Recordation tax may apply to the new loan amount or the net new debt based on local rules. Using the hypothetical rate above: $350,000 × 0.50 percent = $1,750.

Exemptions and special cases

Exemptions exist, but they depend on state, county, and city rules and require proper documentation at recording. Common categories to ask about include:

• Transfers between spouses or domestic partners.
• Transfers between parent and child or grandparent and grandchild.
• Transfers to or from government entities, certain nonprofits, or housing authorities.
• Transfers incident to divorce, probate, or a court order.
• First-time homebuyer programs or housing assistance that may include tax credits or abatements.
• Refinances where recordation tax may apply only to the incremental new debt, or where certain instruments are exempt.

You will need affidavits or certifications to support an exemption. Missing paperwork can delay recording or change what you owe.

Budgeting checklist for Annapolis buyers and sellers

Use this list to build a clear closing budget. Your title company or settlement agent can produce a detailed estimate.

• Deed transfer tax items: state, county, and possibly city.
• Recordation tax items: mortgage or other debt instruments, and any deed recordation charges.
• Recording fees and clerk fees per document.
• Title insurance premium, title search, and settlement fees.
• Lender charges: origination, processing, appraisal, underwriting.
• Prepaids and escrows: property taxes, homeowners insurance, HOA dues, reserves.
• Real estate broker commissions for sellers.
• Any local stamps or transfer-related municipal fees.

How to get an exact estimate

You can turn the formulas above into a precise number by following a simple process:

1. Confirm the exact property address and whether it falls inside Annapolis city limits or in unincorporated Anne Arundel County.
2. Ask your title company or settlement agent for an itemized closing estimate using that address. Request line items for state, county, and any city transfer taxes, plus mortgage recordation taxes.
3. If you are financing, ask your lender for a Closing Disclosure that includes the recordation tax estimate for your loan amount.
4. Confirm who pays each tax in your purchase contract. If a credit is involved, ask the title company how it will appear on the settlement statement.
5. If you believe you qualify for an exemption or a first-time buyer credit, notify the title company early. They will outline the affidavits and documentation needed.

Where to verify current rates

Rates and rules change. For the most current figures and forms, contact these sources directly:

• Maryland Department of Assessments and Taxation (SDAT).
• Anne Arundel County government offices such as the Treasurer, Recorder of Deeds, or Finance Department.
• City of Annapolis Office of Finance or City Recorder for properties within city limits.
• Maryland Comptroller and Maryland Department of Housing and Community Development for state-level tax guidance and housing assistance.
• Local title companies and settlement agents that work daily in Anne Arundel County and Annapolis.
• Local REALTOR associations, including Maryland REALTORS or the Anne Arundel County association, for customary payment practices.

Practical tips to avoid surprises

• Put transfer and recordation responsibilities in writing. Make sure the contract and the title company’s settlement instructions match.
• Verify location. City limits vs. county changes your combined rate and total.
• Do not assume a cash purchase eliminates taxes. Cash avoids mortgage recordation taxes, not deed transfer taxes.
• When offering concessions, many sellers prefer a credit toward buyer closing costs instead of paying a tax line directly. Ask the title company how credits are applied.
• Keep documentation ready if you are claiming an exemption. Affidavits must be completed correctly before recording.

The bottom line for Annapolis

Maryland transfer and recordation taxes are part of almost every closing. The total depends on state, county, and sometimes city rates, plus your loan amount. Who pays them is negotiable and should be addressed early in your contract. With the property address and the right contacts, your title company and lender can give you an exact estimate before you are deep into underwriting.

If you want a clear, itemized closing picture and a disciplined plan for negotiating who pays what, reach out to Leo Miller. Let’s connect and build your numbers the right way.

FAQs

In Annapolis, what are transfer and recordation taxes?

• They are taxes tied to recording the deed and mortgage documents. Transfer tax typically applies to the sale price on the deed. Recordation tax often applies to the mortgage amount.

Who usually pays these taxes in Maryland home sales?

• It is negotiable and defined by the contract. Sellers commonly pay the deed transfer tax, and buyers with loans commonly pay the mortgage recordation tax, but both are often adjusted in negotiation.

Do city limits in Annapolis change my tax total?

• Yes, properties inside the City of Annapolis may face a city transfer tax or different rules that change the combined rate compared to unincorporated Anne Arundel County.

Do cash buyers still pay any of these taxes?

• Cash buyers avoid mortgage recordation taxes because there is no loan to record. Deed transfer taxes usually still apply.

Are there exemptions or credits for first-time buyers or family transfers?

• Some exemptions and programs exist, such as intra-family transfer categories and certain first-time buyer assistance, but availability and requirements vary and require proper documentation at recording.

How do I get a precise estimate before I make an offer?

• Ask a local title company for an itemized estimate using the exact property address, and request your lender’s Closing Disclosure if you are financing. Confirm who pays what in the contract.