How significant is the proposed recordation tax rate increase in Howard County?

I wrote “The proposed Fiscal Year 2021 Operating Budget for Howard County includes $21 million in anticipated new funding from an expected recordation tax rate increase” on April 21st. Since then other local bloggers have provided information on this topic:

Included in the proposed Howard County Government Operating Budget:

The budget also includes $21 million in anticipated new funding from an expected recordation tax rate increase from $2.50 per $500 transaction, currently the lowest among all counties in Maryland (with rates ranging between $2.5~$6.6), pending County Council legislation. While no tax increase is desirable, this move will keep our County on par with peer jurisdictions and is necessary relief in a time of severe fiscal difficulty without impacting most residents or businesses (except those involved in property sales or refinancing). It also helps avoid other tax actions that may impact more tax payers in a more significant way.

The thing that I wanted to look at this morning was the statement “this move will keep our County on par with peer jurisdictions”.

First lets look at the proposed rate change via the information shared about the legislation (I think it should be filed later today):

Next lets look at the rates in surrounding areas: (source)

Montgomery County: 8.90/1000 (on 1st $500K) | 13.50/1000 above $500K

Prince George’s County: 5.50/1000

Anne Arundel: 7/1000

Baltimore County: 5/1000

Baltimore City: 10/1000

Carroll County: 10/1000

Current Howard County: 5/1000

Proposed Howard County: 4/1000 (on 1st $250,000) | 10/1000 (on the next $250,001 – $500,000) | 16/1000 ( on the next $500,001 to $1,000,000) | 22/1000 ($1,000,001 and above)

Looking at the proposed Howard County rates the changes do not “put us on par” but looks to put us way “over par” as it relates to surrounding areas.

  • Important item of note – Carroll County does not have a county transfer tax so they are actually the least expensive in total taxes to purchase and sell a home. They are on the expensive side to refinance a home of the jurisdictions noted above.

Here is a link from Dr Wu that has some numbers you might find interesting:

I have more research to do on this topic and look forward to reading the full legislation after it is filed.

From this article I wrote back in February:

How heavy a tax burden is already on residents of Howard County?

  • Howard County has the 2nd highest property tax rate (including fire tax) and the highest personal income tax rate allowed by the State. The recordation tax is at the lowest rate in the State and the transfer tax is below four other counties.
  • The County recently increased the fire tax and trash fee, imposed a new ambulance fee (the revenues are restricted for specific uses), and increased the School Surcharge (restricted for school capital projects).
  • The County recently approved a Plastic Bag fee that will begin in October 2020 (restricted for “environmental” purposes).

The question that will be asked by many (I expect)…given the past tax increases by the current County Council and the financial hurt that will be felt by many due to the Coronavirus pandemic…is this the time for another tax increase for our county?

Let me know your thoughts in the comments.

Scott E

Link used to calculate information in the chart above:

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  1. NO- we don’t deserve all these tax increases! I seriously feel like an idiot living here- I could live better somewhere else. I grew up here and my parents are still here so that sorta is keeping my ties to Howard County… but I would be better off all around. The advantages are NOT outweighing the disadvantaging anymore.


    • Strange Id feel more like an idiot if I lived in a million dollar home and I got completely upset at having to pay an extra $3250 when I sold my home. I mean the money I’d be getting on my sale would be reduced by a whopping .325% thats right a whole one third of 1%. How dare I get ripped off! Never mind the fact that the real estate commissions on such a sale would be 50k or higher.


  2. Many people in HoCo directly or indirectly work for the federal gov’t. Over the next 3-5 yrs, the fed gov’t will have to cut back on gov’t spending. (It does not matter if Trump or Biden is Pres.)
    Over the next 3-5 yrs, Md. gov’t will have to reduce the Md. budget.

    Expensive houses in HoCo have become difficult to sell ($800k and above) partly because of the SALT tax. This will make the assessed values for expensive homes to drop over the next 3-5 yrs. The lower and mid priced homes will stay in the same range. Commercial (shopping centers, mall, office buildings) assessed values will be dropping MORE in the next 1-5 yrs. That means the county will have to increase the assessed tax rate for ALL homes in HoCo. In other words, HoCo property taxes will have to go up beginning next yr.

    I do not see Md gov’t receiving any increases in sales tax unless they increase the rate which injures lower and middle class consumers. I do not see income tax revenue increasing hence forth unless they increase the rate.

    The new bag tax effects lower income consumers more than upper class consumers.

    This proposed recording tax is a hidden tax so it will not effect future real estate transactions.

    Calvin is a smart guy but I would not want his job. His future decisions will be very difficult and painful. And, the liberal county council will make it more difficult. (I am a democrat.)


    • Recordation tax is collected at settlement and is traditionally split by the buyer and seller. So, this will affect all future transactions. Not to mention that County Council is also proposing increasing the County Transfer tax from 1% to 1.5%.

      Can you imagine our government ACTUALLY–not increasing their budget????? IF most of it’s citizens are having to make tough choices, the government will have to follow suit.


  3. Is this tax paid by developers or buyers?
    The impact taxes, paid by developers are certainly lower than other counties and developers have lobbied hard to keep them that way.
    Is this a switch to get revenue for infrastructure for new schools and roads from residents so developers can continue to pay a pittance?


  4. As I understand it, the recording fee is paid at settlement by developer (unless it is negotiated) when the developer buys the property. The buyer of a new house then pays the recording fee again.

    If you sell your older house the new owner pays it at the time of settlement. Unless, the closing cost are negotiated. One way or another, the seller or the buyer will be paying the recording fee.


    • You’ve got things backwards. Under Maryland Law (Real Property Article Section 14-104(b)) recordation taxes are split between the buyer and seller unless a different arrangement is negotiated. In my experience it has been split in both my home purchases.


      • Yes, I knew about the split fee requirement. But, real estate sales is all about negotiations.

        The amount is going to be paid by the buyer, one way or another. It is built into the price.

        An astute buyer would offer a lower price but offer to pay the settlement charges. A motivated seller might counter offer by offering to pay the settlement charges. If the buyer and seller are both real estate novice, they leave it up to the real estate agent(s).


      • Thats quite a cynical view and not at all true. It all depends on supply and demand. If a house is “hot” then the seller has all the leverage and can make demands because if one seller balks another will step in. Conversely if the house has been on the market for a while then a buyer holds the chips. This is not one size fits all as you seem to be saying.


      • ” real estate sales is all about negotiations. ”

        I am not a real estate agent but I have A LOT of experience (as a buyer and seller) with residential, rental and commercial properties in HoCo.


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