Montgomery County, Maryland: A Deep Dive into Rising Recordation Tax Rates and Property Taxes

Montgomery County Tax Rates and Property Taxes

Montgomery County, Maryland: A Deep Dive into Rising Recordation Tax Rates and Property Taxes

Overview of New Tax Amendments

In a significant move, the Montgomery County, Maryland Council has voted in favor of increasing its real estate recordation tax. This decision, enacted through Bill 17-23, is a one-time cost to register a purchase, sale, or financing of real estate as a public record. The tax applies to the consideration on a real estate purchase or sale, and to the amount of new debt on a mortgage or deed of trust.

Breakdown of Recordation Tax Components

Montgomery County recordation taxes comprise three primary elements:

  1. A base rate of $2.08 for each $500 on the sale price or new debt, with proceeds allocated to the County’s general fund.
  2. A school increment of $2.37 for each $500, with proceeds designated for capital projects of Montgomery County Public Schools.
  3. A recordation tax premium of $2.30 for each $500 for values exceeding $500,000.

From October 1 this year, the recordation tax rates will increase. The base rate and school increment remain unchanged, but the recordation premium will rise from $2.30 per $500.

Detailed Analysis of the New Recordation Tax Rates

The recordation tax rates are determined based on the value of the recordation. Here's a detailed analysis of the increase in recordation tax rates:

  • For recordation value between $500,000 and $600,000, the rate remains unchanged at $2.30/$500.
  • For recordation value between $600,001 and $750,000, the rate will be $5.75/$500, marking a 150% increase.
  • For recordation value between $750,001 and $1,000,000, the rate will be $6.33/$500, a 175% increase.
  • For recordation values above $1 million, the rate will be $6.90/$500, a 200% increase.

The proceeds from the recordation premium will be split equally among Montgomery County government capital projects, public school capital projects, and rent assistance in the Housing Initiative Fund.

Impact on Property Taxes

This tax modification comes alongside other proposed increases to meet the County’s rising education and housing costs. Earlier this year, a budget proposal included a 10-cent hike in the property tax rate of approximately $0.99 per $100 of assessed value, which would equate to a 10% increase in property taxes. While the Montgomery County Council has indicated they are unlikely to approve the full 10% increase, they are targeting a 4.7% property tax increase instead.

Rent Regulations and Their Implications

Simultaneously, rent regulations are also under review. Council members Mink and Jawando have introduced the Housing Opportunity Mobility and Equity (HOME) Act. This act aims to limit yearly rent increases to 3% or the County’s voluntary rent guidelines, whichever is lower. A competing bill proposes a cap on rent increases at CPI plus 8%, with certain rare hardship exemptions.

These changes are not exclusive to Montgomery County. Other local taxing jurisdictions are expected to follow suit, with similar legislation likely to cross regional borders.

In Summary

The changes to recordation tax rates and property taxes in Montgomery County reflect a broader trend of tax regulation adjustments across the region. These developments can significantly impact real estate transactions, making it crucial for individuals and businesses to stay informed and adapt their strategies accordingly.

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916 Properties
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Open 7/28
7768 Heatherton Ln Potomac,  MD 20854
$749,995
Neighborhood: Inverness Knolls
3
Beds
2F21/2
Baths
1,890
Sq.Ft.
1978
Year Built
1
Day on Site
MDMC2140690
MLS
$580,000
Neighborhood: Lakeshore
4
Beds
2F11/2
Baths
1,491
Sq.Ft.
1983
Year Built
35
Days on Site
MDMC2132946
MLS
$325,000
Neighborhood: Bethesda
2
Beds
1
Baths
1,126
Sq.Ft.
1963
Year Built
18
Days on Site
MDMC2139120
MLS
$1,175,000
Neighborhood: Greenwich Forest
3
Beds
3
Baths
2,876
Sq.Ft.
1959
Year Built
14
Days on Site
MDMC2138352
MLS
Open 7/27
12805 W Old Baltimore Rd Boyds,  MD 20841
$1,125,000
Neighborhood: Summerfield Crossing
5
Beds
4F11/2
Baths
5,800
Sq.Ft.
2005
Year Built
11
Days on Site
MDMC2140210
MLS
$925,000
Neighborhood: Fallsgrove
3
Beds
3F11/2
Baths
2,432
Sq.Ft.
2004
Year Built
9
Days on Site
MDMC2140318
MLS
Open 7/27
9535 Fern Hollow Way Montgomery Village,  MD 20886
4
Beds
3F11/2
Baths
2,158
Sq.Ft.
1976
Year Built
5
Days on Site
MDMC2141018
MLS
$799,900
Neighborhood: Hammond Woods
3
Beds
2F11/2
Baths
2,030
Sq.Ft.
1951
Year Built
4
Days on Site
MDMC2141096
MLS
$509,000
Neighborhood: Carroll Knolls
3
Beds
2
Baths
1,868
Sq.Ft.
1951
Year Built
4
Days on Site
MDMC2141126
MLS
Open 7/28
19958 Gateshead Circle #71 Germantown,  MD 20876
$315,000
Condo: Scenery Pointe Codm
2
Beds
1F11/2
Baths
1,242
Sq.Ft.
1991
Year Built
3
Days on Site
MDMC2141154
MLS
$245,000
Neighborhood: North Creek Place Codm
2
Beds
1
Baths
1,077
Sq.Ft.
1967
Year Built
3
Days on Site
MDMC2141262
MLS
Open 7/28
18300 Feathertree Way #201 Montgomery Village,  MD 20886
2
Beds
2
Baths
1,154
Sq.Ft.
2000
Year Built
2
Days on Site
MDMC2140856
MLS
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  • Frequently Asked Questions

    Q1: What is the Recordation Tax in Montgomery County, Maryland?

    A1: The recordation tax is a one-time cost to register a purchase, sale, or financing of real estate as a public record in Montgomery County. It applies to the consideration on a real estate purchase or sale, and to the amount of new debt on a mortgage or deed of trust.

    Q2: How is the Recordation Tax calculated?

    A2: The recordation tax comprises three elements: a base rate, a school increment, and a recordation tax premium. The base rate and school increment remain unchanged, but the recordation premium will rise from October 1, 2023, depending on the value of the recordation.

    Q3: How does the increase in Recordation Tax affect property owners?

    A3: The increase in the recordation tax will mean higher costs for registering real estate transactions. This can impact both buyers, who usually pay the tax in a property purchase, and sellers, who may need to pay it in certain circumstances.

    Q4: Are there any changes to Property Taxes?

    A4: Yes, there are proposed increases to property taxes in Montgomery County. While the exact increase is yet to be finalized, the Council is targeting a 4.7% property tax increase.

    Q5: What is the HOME Act?

    A5: The Housing Opportunity Mobility and Equity (HOME) Act is a piece of legislation introduced in Montgomery County that aims to limit yearly rent increases to 3% or the County’s voluntary rent guidelines, whichever is lower.

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