Buying or selling in Maryland and confused by “recordation” and “transfer” taxes? You’re not alone. These closing line items can change your bottom line by thousands, and the rules vary by county. If you’re planning a move in Prince George’s County, Upper Marlboro, or nearby Anne Arundel County, understanding how these taxes work will help you budget, negotiate, and avoid last‑minute surprises. In this guide, you’ll learn who typically pays, how to estimate the amounts, and what to ask your title company so you can plan with confidence. Let’s dive in.
Transfer vs. recordation tax
Transfer tax applies when ownership of a property changes hands. It is typically calculated from the sales price or contract consideration.
Recordation tax applies when documents are recorded in county land records. In residential sales, the most common trigger is recording the buyer’s mortgage or deed of trust. Some jurisdictions also have a deed‑recordation component.
Maryland has both state and county components, and counties can add their own rates or surcharges. That’s why the final numbers vary across the state.
Who usually pays in Maryland
Local custom matters, and everything is negotiable in the purchase contract. Here is what you’ll often see in practice:
Transfer tax payment
- Frequently paid by the seller, or split between buyer and seller, depending on local custom and negotiation.
- In many Prince George’s County transactions, sellers cover transfer tax, but confirm the current norm with your title company for the neighborhood you’re targeting.
Mortgage recordation tax payment
- Typically paid by the buyer when the buyer is getting a mortgage, because the tax is charged on recording that mortgage.
- Cash buyers usually avoid mortgage recordation tax. They may still be responsible for transfer tax unless the contract assigns it to the seller.
It’s all negotiable
- Your contract can shift who pays what. Market conditions, lender rules, and seller concessions will influence the final split.
- Lenders require the mortgage to be recorded. They generally expect any mortgage recordation tax to be settled at or before closing.
What changes by county
Maryland counties set local rates and may offer exemptions or credits for specific situations. Always confirm current figures before you budget.
Prince George’s County (Upper Marlboro)
- Expect both transfer and recordation components at the county level, plus standard clerk recording fees.
- Many local deals follow the practice of seller paying the transfer tax and buyer paying mortgage recordation tax. Local practice can differ by neighborhood and contract, so check with your title company before making assumptions.
- Ask about any county‑level programs or exemptions that could apply to your situation.
Anne Arundel County
- Also charges county‑level transfer and recordation components and has standard recording and administrative fees.
- Certain exemptions or credits may apply in specific cases, such as qualifying nonprofit or governmental transfers. Ask your title company to screen your file for eligibility.
Where these are collected
- Deeds and mortgages are recorded with the Clerk of the Circuit Court in each county. The county finance or revenue office typically administers local transfer and recordation taxes.
- Recording offices also charge documentary and clerk fees that are separate from the tax percentage.
How to calculate: formulas and a clear example
You can understand the moving parts even if you don’t have the exact local rate yet. Here is the framework:
Simple formulas
- Transfer tax = transfer tax rate × sales price (or other taxable consideration)
- Mortgage recordation tax = recordation tax rate × mortgage principal
- Deed recordation component (if applicable) = deed rate × amount subject to recordation
Common add‑ons at closing
- Clerk/document recording fees (per document or page)
- E‑recording service fees
- Title company settlement fee and title insurance premiums
- State or local filing surcharges
Example calculation (hypothetical)
Let’s say you’re buying at $400,000 with a $320,000 mortgage. Assume hypothetical rates for illustration only:
- State transfer tax 0.5% and county transfer tax 1.0% for a combined transfer tax of 1.5%.
- Mortgage recordation tax 0.5% on the new mortgage.
Here’s how that might look:
- Total transfer tax: 1.5% × $400,000 = $6,000. If custom or contract says the seller pays, that $6,000 is a seller cost.
- Mortgage recordation tax: 0.5% × $320,000 = $1,600, typically a buyer cost at closing.
- Recording and documentary fees can add several hundred dollars more, depending on document count and e‑recording.
Impact on your bottom line
- Buyer cash to close often includes your down payment, prepaids and escrows, lender fees, title costs, mortgage recordation tax, any portion of transfer tax assigned to you, and recording fees.
- Seller net proceeds = sales price minus mortgage payoffs, any transfer/recordation taxes the seller agreed to pay, settlement fees, prorations, and concessions.
The exact numbers depend on final loan amount, negotiated tax split, and local fee schedules. Always ask for a preliminary settlement estimate for your specific property.
Special situations: exemptions and credits
Programs and exemptions vary by county and by situation. Examples that may apply, depending on jurisdiction and documentation requirements:
- Certain transfers between spouses or immediate family members, or transfers to qualifying nonprofit or governmental entities.
- County‑specific credits or reductions that may be available for first‑time buyers, veterans, or defined affordable housing purchases.
- Refinances may be treated differently for mortgage recordation tax, and payoffs of prior liens can affect the calculation.
- Assumptions or partial releases can trigger partial recordation fees.
These benefits are never automatic. Your title company will help confirm eligibility and file any required affidavits with the Clerk if you qualify.
First‑time buyers, cash buyers, and VA loan users
- First‑time buyers: Budget for your share of transfer and recordation items, then ask your agent and title company to screen for any county programs or credits you might qualify for.
- Cash buyers: You’ll usually avoid the mortgage recordation tax. You may still pay transfer taxes unless your contract shifts them to the seller.
- VA loan and military relocations: Your lender will require proper recording of the deed of trust. Some programs or county credits may apply in certain cases; timelines and documentation matter, so raise this early with your lender and title team.
What to ask your title company
Before you write your offer or go under contract, request a quick consult with a local title company or settlement attorney. Ask for:
- A preliminary Closing Disclosure or settlement estimate showing:
- State and county transfer taxes (itemized)
- Mortgage recordation tax (itemized)
- Any deed‑recordation component
- Recording and clerk fees per document
- Title insurance premium and settlement fee
- A buyer cash‑to‑close worksheet showing all government taxes and fees, plus prepaids and escrows.
- A seller net sheet showing transfer tax deductions, payoffs, commissions, prorations, and expected proceeds.
- A confirmation of local custom in your specific county or neighborhood for who pays which tax.
- A quick screen for any exemptions or credits you might claim and the documentation needed.
- Expected timelines for recording and payment.
Steps to avoid closing surprises
Talk with your lender early. Ask which closing costs can be financed and which must be paid at closing. Some items can be rolled into the loan depending on program rules.
Get a written estimate from the title company. Ensure transfer tax, recordation tax, and recording fees are itemized so you can compare apples to apples.
Clarify who pays what in your contract. If you want the seller to cover all or part of the transfer tax, write it in. Do not rely on “custom.”
Re‑check before final signing. If your loan amount changes or you negotiate new concessions, your taxes and fees may change too. Ask for an updated estimate.
Bring documentation for exemptions. If you believe you qualify for any special treatment, provide the paperwork early so the title team can prepare required affidavits.
Local guidance you can trust
You should not have to guess at these numbers. If you’re buying or selling in Upper Marlboro, Prince George’s County, Anne Arundel County, or anywhere in the DMV, I’ll help you get a clear, line‑by‑line estimate and negotiate a fair split of costs for your situation. Ready for a quick, pressure‑free consult and a tailored closing cost preview? Reach out to Sharron Owens. We’ll make a plan that protects your bottom line.
FAQs
Who pays Maryland transfer tax at closing?
- It’s negotiable. Many local customs place transfer tax on the seller, while buyers typically pay the mortgage recordation tax. Confirm with your title company for your county.
Does a cash buyer in Maryland pay recordation tax?
- Cash buyers usually avoid mortgage recordation tax because no mortgage is recorded. They may still pay transfer tax unless the contract assigns it to the seller.
Can transfer and recordation taxes be rolled into my mortgage?
- Some loan programs allow certain closing costs to be financed if underwriting permits. Mortgage recordation tax is commonly due at closing; ask your lender and title company.
How do I get exact transfer and recordation numbers in Prince George’s County?
- Request a preliminary settlement estimate from a local title company or settlement attorney. They will apply current county and state rates and add required recording fees.
Are there exemptions or credits for first‑time buyers or veterans in Maryland?
- Some jurisdictions offer limited credits or exemptions. They are county‑specific and documentation‑dependent. Ask your title company to check eligibility.
Do these taxes apply when I refinance in Maryland?
- Refinances can be treated differently for recordation tax, and prior lien payoffs may change the calculation. A title company can explain how the rules apply to your loan.
