Proposed Recordation Tax Increase To Take Effect In July If Passed

Dated: 05/11/2016

Views: 303

I attended a hearing May 10 at the Montgomery County Council Building about Expedited Bill 15-16, which proposes an increase in real estate recordation taxes to become effective July 2016.


I heard a lot of strong arguments for increased funding for Montgomery County Public Schools. I also heard very strong arguments why the proposed recordation tax increase may not the best way to accomplish this.


As a home buyer, a home seller, or someone who might want to refinance in the future, how would this bill affect you?


The proposed bill would raise the recordation tax rate by an additional 22% for transactions under $500,000 (transaction means purchase, sale, or refinance). For transactions over $500,000, the tax rate would be increased by an additional 48%. 

If passed, the bill will make Montgomery County's recordation tax one of the highest in the nation. 

Les than 68% of the tax increase is earmarked to benefit our schools. The rest of the money will benefit capital improvement projects and rental assistance.


To put this in real world numbers, here are the current and proposed recordation tax amounts for homes at the $400,000 and $650,000 price points:

                                              Current                 Proposed

$400,000 home                $2,409                    $2,940

$650,000 home                $4,605                    $5,730


It's also worth noting that in Maryland, property taxes are paid in advance. At the time of purchase, a home buyer will pay anywhere from a couple of months' up to nine or ten months' of property taxes -- in cash -- in advance. In neighboring areas, property taxes are paid in arrears so this additional burden at closing is not present.

Nobody is disagreeing with the fact that our schools need more money. Does introducing a bill on April 19, having one public hearing and one committee hearing and a final vote on May 18 within a one-month period, allow enough time for public discussion of the bill and possible funding alternatives, and examination of the long-term effects of such a tax increase?


Here's a brief 90-second video, and if you would like to watch the entire hearing, you can see it by clicking here.

Blog author image

Debbie Browne

With more than 30 years of combined experience in Montgomery County real estate, Debbie Browne and her partner Charles Chapman are an exceptional team to help you buy or sell your home. Big-picture ov....

Latest Blog Posts

7915 Kentbury Drive Price Reduced And Open Sunday

7915 Kenbury Drive Price Just Reduced to $949,900Open Sunday, Oct. 7 from 1:00 to 4:00Expanded and fully renovated in 2011. Open kitchen with SS appliances and granite counter tops opens up to

Read More

7915 Kentbury Drive Open Sunday 1 To 4

Price Just Reduced!Move In Ready 6 BR, 4 FB Colonial with GarageJust Blocks From Downtown Bethesda!Open Sunday, September 9 1:00 to 4:00Click here for full details: 7915 Kentbury

Read More

Three Really Cool Online Voter Registration Tools

As a Realtor, I remind my home buyers and sellers to update their mailing addresses, contact the utility companies, update drivers licenses - and help them celebrate their new homes with friends

Read More

June 2018 Housing Market Update

June 2018 Housing Market Update: Prices at or near all-time highs in Washington D.C. and Baltimore Metro areas. Inventories continue their unrelenting decline, days on market at or near record.

Read More