Understanding Baltimore County’s Transfer Tax: A Quick Guide
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
If you’re preparing to sell your home in Baltimore County, understanding the costs involved is key to a smooth transaction. One expense you may encounter is the Baltimore County transfer tax, which is charged when real estate ownership changes hands.
Transfer taxes are typically calculated as a percentage of the sale price, and state and local governments can assess them. Depending on where your property is located in Baltimore, you could owe state, county, and even city transfer taxes at closing.
In this guide, we’ll explain how transfer taxes work in Baltimore County, including who typically pays them, what rates apply, and whether any exemptions exist. We’ll also show you how to estimate the amount you might owe, so there are no surprises when it’s time to close the deal.
Connect with a Top Agent to Help Maximize Value
Even rockstar agents can’t make your tax liability disappear, but HomeLight data shows that the top 5% of agents across the U.S. help clients sell their home for as much as 10% more than the average real estate agent, helping offset the tax bill.
What are transfer taxes?
Real estate transfer taxes are charges assessed by the government when property ownership changes hands. According to the Federal Trade Commission, these taxes are typically imposed at the state or local level. They are payable when the title — the legal proof of property ownership — is transferred from the seller to the buyer.
The amount you owe in transfer taxes depends on your property, with different rates set by state, county, and sometimes city authorities. Like other forms of taxation, transfer taxes help generate revenue for government services and infrastructure. Sellers should be aware of these potential costs to avoid surprises during the closing process.
Who pays for transfer taxes?
In Baltimore County, the responsibility for paying transfer taxes can fall to the buyer and the seller of a property, but it depends. The sales agreement contract can specify which party is responsible for the tax, but in lieu of that, Baltimore transfer taxes are split evenly between the buyer and the seller.
What are the types of transfer taxes?
Transfer taxes will typically vary based on local guidelines but can generally be broken down into three categories — state, city, and county, depending on the state. Here’s a quick look at how it works in Baltimore County:
State transfer taxes
Maryland’s transfer tax is .5% of the property’s purchase price (or actual consideration). However, first-time home buyers in the state who are purchasing a primary place of residence are eligible to be taxed at a rate of .25%.
First-time home buyers are required to submit an exemption form to determine eligibility.
Additionally, there is a state recordation tax of $2.50 for each $500 (or fraction thereof) of the property’s value (or consideration).
County transfer taxes
Baltimore County has a transfer tax rate of 1.5% of the property’s sales value.
City transfer taxes
Baltimore also applies a transfer tax rate of 1.5%, multiplied by the amount of consideration. Additionally, the state transfer tax is 0.5%, multiplied by the amount of the consideration.
The combined total transfer tax on the property is 2% of the consideration paid for the property.
Other transfer fees
In addition to transfer taxes, there are possible fees to consider, such as from a homeowner’s association or another local neighborhood organization. Again, as these can vary heavily based on location, it’s important to consult a professional.
If you’re selling your home for sale by owner, consulting a professional might help with some of the finer points of the process and give you a better idea of what you can expect when it comes to the pros and cons of selling without a realtor.
Are transfer taxes deductible?
In most cases, you cannot deduct transfer taxes on your income tax return. However, there is still a potential tax benefit when it comes time to report your capital gains.
Capital gains are the profit you earn from selling your home, and they are subject to federal taxes. The good news is that sellers may be able to treat transfer taxes as part of their selling expenses.
According to IRS guidelines, you can include transfer taxes as selling costs, which can then be subtracted from your home’s final sale price. Doing this may reduce the taxable amount of your capital gains and potentially lower the taxes owed on your home sale profit.
Transfer tax exemptions
Some real estate transactions in Maryland may be eligible for exemptions from transfer taxes.
Exemptions can significantly reduce the financial burden during the property transfer. Some common situations where transfer taxes may not apply include:
- When property is transferred to a state agency, the state itself, or a political subdivision within the state.
- When property is transferred between family members or domestic partners, such as to a spouse, son, daughter, stepson, stepdaughter, parent, sibling, grandchild, grandparent, or a domestic partner.
Estimating transfer taxes for your home sale
To get a clearer picture of how much you might make from selling your Baltimore home, try HomeLight’s Net Proceeds Calculator. This tool factors in your closing costs — including transfer taxes, agent commissions, and renovation expenses — to help you quickly estimate your potential profit.
For a more precise breakdown of your transfer taxes and other closing costs, it’s smart to partner with a top real estate agent.
A knowledgeable agent can explain how transfer taxes are handled in your area and whether there’s room to negotiate who pays them. Talking about these costs upfront can help you avoid surprises and keep more of your hard-earned money at closing.
Header Image Source: (Tia Cunningham / Unsplash)
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