Are transfer and recordation taxes making your Baltimore closing costs feel confusing? You are not alone. These two taxes show up on almost every sale or refinance, yet they work differently and can be negotiated. In this guide, you will learn what each tax covers, who typically pays in Baltimore City and Baltimore County, how the math works, and what to watch in your contract so you can plan with confidence. Let’s dive in.
Transfer tax basics
Transfer tax is charged when legal title to a property changes hands. In Maryland, there is a state component and a local component. Baltimore City sets the local portion for properties in the city, and Baltimore County sets the local portion for properties outside the city limits.
The tax is usually calculated on the consideration listed on the deed. Consideration often means the purchase price in a standard sale. If the price is split or non-monetary, special rules can apply, so your title company will verify what the county or city requires.
Recordation tax basics
Recordation tax is charged when a document that creates or secures a lien is recorded, most commonly your mortgage or deed of trust. It is calculated on the principal amount of the loan that is recorded. If you refinance, the tax is typically calculated on the new loan amount.
Think of it this way: transfer tax applies to the sale itself. Recordation tax applies to the mortgage recorded to fund the sale.
City vs. County: what changes
The same state framework applies across Maryland, but the local portion varies by jurisdiction.
- Downtown Baltimore properties use Baltimore City’s local rates.
- Properties outside the city limits use Baltimore County’s local rates.
Because local rates can change by ordinance, you should confirm the current combined transfer tax rate and the current recordation tax rate for your specific property address with your title company or local finance office before budgeting.
Who usually pays in our market
Customs can shift with market conditions, but here is what you will often see in Baltimore area practice:
- Transfer tax: often paid by the seller. This is common but negotiable. In some cases the parties split the cost.
- Recordation tax on the buyer’s mortgage: usually paid by the buyer, since it is tied to the buyer’s loan.
- Title company expectations: many title companies default to buyer paying mortgage recording costs and seller paying transfer tax, unless the contract says otherwise.
The contract controls. Make sure the allocation of state and local transfer taxes and recordation tax is spelled out in writing.
Condo vs. rowhome details downtown
Whether you buy a condo or a rowhome, the transfer and recordation framework is the same. A few practical notes help avoid surprises:
- Condos: check for any condo association transfer fee or administrative fee in addition to municipal taxes. Also review condo fee proration on your settlement statement.
- Rowhomes: if the seller has subordinate mortgages or liens to release, extra recording fees may apply. Your title company will list those on the seller side of the closing statement.
Contract language to review closely
Your Maryland contract of sale should clearly assign who pays each item. Look for clauses that specify:
- “State and local transfer taxes” paid by the seller, buyer, or split.
- “Recordation tax on buyer’s mortgage” paid by the buyer.
- Escalation or appraisal adjustments that change the purchase price, which change the transfer tax base.
- Assumptions or seller financing, which can change how taxes are calculated and who pays.
- Multiple deeds or multi-party transfers, which can trigger additional recordation events.
Ask your agent and title company to confirm that the document structure matches the negotiated allocation.
Exemptions and special cases to check
Some transactions qualify for exemptions or different treatment. Common categories to ask about include:
- Transfers between spouses or related to divorce.
- Transfers to or from government entities or certain nonprofits.
- Gifts or nominal consideration transfers, with required documentation.
- Foreclosures, deeds in lieu, or trustee actions that are handled differently.
- First-time homebuyer programs that reduce or waive certain costs for eligible buyers. Eligibility and documentation are strict and can change, so verify early.
Your title company will request proof for any claimed exemption and confirm what applies in Baltimore City or Baltimore County.
How the math works
Here is the typical calculation framework you will see on a settlement statement.
- Transfer tax: applicable transfer tax rate multiplied by the purchase price or other taxable basis shown on the deed.
- Recordation tax: applicable recordation tax rate multiplied by the principal amount of the mortgage or other recorded obligation.
Hypothetical example for clarity
- Purchase price: 400,000 dollars. Buyer finances 320,000 dollars.
- Transfer tax: transfer tax rate multiplied by 400,000 dollars.
- Recordation tax on the mortgage: recordation tax rate multiplied by 320,000 dollars.
This example is for illustration only. Always confirm the current city or county rates for your specific address before budgeting.
Budgeting checklist for buyers
Use this quick plan to avoid last-minute surprises.
- Before you write an offer: ask how the transfer tax will be allocated and make sure the contract states it clearly.
- After your offer is accepted: request a closing cost estimate from your title company showing the local transfer and recordation rates used.
- Before your loan is locked: confirm the exact loan amount to be recorded, since that amount drives the recordation tax.
- If you are buying a condo: ask the association or management if there is a transfer or move-in fee.
- Final review: verify that any change to price or credits is reflected in tax recalculations on your closing disclosure.
Budgeting checklist for sellers
A few simple steps can keep your net proceeds accurate.
- At listing: decide how you will handle transfer tax in negotiations and price strategy.
- At contract: confirm in writing who pays the transfer tax and whether any portion is split.
- With your title company: disclose all liens and home equity loans so any release recording fees are captured.
- If you expect an exempt transfer: provide documents early so the title company can apply the correct treatment.
Common pitfalls to avoid
- Mixing up transfer tax and recordation tax. They are separate and often paid by different parties.
- Using outdated rate tables. Local rates can change, so confirm with your title company or finance office.
- Missing condo association fees or city registration fees that are small but common.
- Forgetting that price changes from escalation clauses or appraisal negotiations change the transfer tax base.
- Overlooking subordinate lien releases that can add recording fees on the seller side.
How a local advisor helps
You get clarity and leverage when your agent understands how these taxes work in Baltimore City and Baltimore County. A skilled advisor will help you structure the contract, verify current rates with your title team, and make sure your closing disclosure reflects the final numbers.
If you are planning a Downtown purchase or sale and want a clean, well-managed path to closing, connect with a trusted neighborhood specialist. Reach out to Christina Giffin to map your numbers, align your contract strategy, and move forward with confidence.
FAQs
What is the difference between transfer tax and recordation tax in Baltimore?
- Transfer tax is tied to the property sale price, while recordation tax is tied to the mortgage or lien amount recorded to finance the purchase.
Who typically pays transfer tax and recordation tax in Baltimore-area deals?
- Sellers often pay transfer tax and buyers usually pay recordation tax on the buyer’s mortgage, but the contract can allocate these costs differently.
How do transfer and recordation tax rates differ between Baltimore City and Baltimore County?
- The state framework is the same, but each jurisdiction sets its local portion, so combined rates differ and must be confirmed for the specific address.
Do condos in Downtown Baltimore have extra fees beyond taxes?
- Some condo associations charge a transfer or move-in fee and you will also have condo fee prorations; verify with the association or management.
Can first-time homebuyers in Baltimore get tax relief on closing costs?
- Some programs may reduce or waive certain costs for eligible first-time buyers, but rules change and documentation is required, so verify early.
How do escalation clauses or appraisal changes affect my taxes at closing?
- If the purchase price changes, the transfer tax base changes, so the title company will recalculate the tax before settlement.
