The cost of buying a home in Montgomery County may soon increase, as County Council President Nancy Floreen has proposed an increase in the recordation taxes paid at real estate closings as a way to finance school construction.
The measure is projected to raise $185 million in revenues with $155 million earmarked for school construction, and a hearing on the bill is scheduled for May 10.
The current recordation tax in Montgomery County is $6.90 per $1,000 for the first $500,000 of purchase price. The recordation tax rate increases to $10 per $1,000 for anything over the $500,000 mark. Buyers and sellers customarily split the recordation tax 50/50.
For example, a purchase price of $400,000 at the current recordation tax rate would amount to $2,415 split between the buyer and seller. On a home sold for $600,000 the recordation tax would amount to $4,105 split between the buyer and seller.
Real estate agents are opposed to the tax increase saying it will hurt first-time homebuyers in particular and may have a negative impact on the local real estate market overall. Proponents of the legislation say it is necessary to fund school expansions in the growing county.
Montgomery County’s population has increased by more than 100,000 residents over the last 10 years and exceeds 1 million residents, making it the most populated county in Maryland.
Check back for updates on this legislation.