Guide to Government Transfer Taxes

Real estate transfer taxes are a type of tax imposed on the transfer of property ownership from one individual or entity to another.  The tax is typically assessed as a percentage of the property’s sale price or appraised value and is paid by the buyer, seller, or both parties involved in the transaction. These taxes contribute to government revenue for public services and infrastructure projects at the state or local level. 

When you buy or sell a home in Virginia or Maryland, you'll need to pay real estate transfer taxes.  Below is an itemized list of these taxes to help your clients understand what they are for and why. 

GOVERNMENT TRANSFER TAXES IN MD

State Transfer Tax :

• This tax is applied to instruments (Deed, Deed of Trust, Riders) that transfer an interest in real property. The tax is one half of 1% (0.5%) of the consideration, except for deeds to a first time MARYLAND home buyer, in which case the tax is one fourth of 1% (0.25%). 

Maryland (Counties) Transfer Tax :

• Counties charge between 0.5% and 1.5%, and Baltimore City's local transfer tax rate is 1.5%. A minority of counties—including Carroll County and Frederick County—have no local transfer tax. 

Cardinal Title Group

GOVERNMENT TRANSFER TAXES IN VA

Currently, transfer taxes are $3.50 per $1,000 of the home sale price. This is usually split as $.50 per $1,000 and $1 per $1,000 for the seller, depending on which tax, and $2.50 per $1,000 for the buyer. 

Seller Transfer Taxes: 

There are always 3 transfer taxes a seller will pay (Grantors, Regional Congestion Relief Fee, and WMATA Captial Fee). 

• Grantors Tax: Sellers in the transaction are known as the “grantor”. For County AND State Deed Taxes, they are charged $.50 per $1,000 of the sales price. 

• Regional Congestion Relief Fee: This particular tax goes towards road/interstate improvement projects and is $1 per $1,000 of the sales price. 

• WMATA Capital Fee: Washington Metro Area Transit Authority. Also $1 per $1,000 of the sales price. Goes towards public transportation improvements i.e., metro, buses, etc.  

Buyer Transfer Taxes:   

When transactions involve a lender, there are always 4 transfer taxes a buyer will pay (County Deed, State Deed, County Security Instrument, and State Security Instrument). Cash buyers will pay 2 transfer taxes (County Deed and State Deed). 

• Recordation Tax (County Deed Tax): 1/3 of the State recordation taxes.  

• Recordation Tax (State Deed Tax): $.25 per $100 of the sales price. 

• County Security Instrument Tax: Refer to County Deed Tax.  

• State Security Instrument Tax: Also $.25 per $100 of the sales price.  

Transfer taxes can sometimes be confusing.  When you send your contracts to Cardinal Title Group, we are happy to answer any questions you may have to provide clarity for you and your clients.