Buying or selling a home in Harford County? Two small-sounding line items can make a big difference in your closing costs: recordation and transfer taxes. The names are similar, and who pays what can be negotiable, which makes them easy to mix up. This guide explains what each tax is, how they are calculated in Maryland, what is typical in Harford County, and where to confirm the current rates for your deal. Let’s dive in.
Transfer tax basics
A transfer tax is a tax on the conveyance of real property ownership. In Maryland, there is a state transfer tax, and counties may add a local transfer tax or surtax. The tax base is generally the consideration stated on the deed, which is usually the purchase price. Transfer taxes are typically collected through your title company at closing.
Recordation tax basics
A recordation tax is paid when an instrument is recorded in county land records. For home purchases, it most often applies to the new mortgage or deed of trust that secures your loan. The amount is calculated on the principal amount of the mortgage being recorded, unless a statute sets a different taxable portion. Recordation taxes are collected when the instrument is presented for recording, often right at or just before closing.
Maryland and Harford layers
Maryland uses a layered system. You may see both a state component and a county component for transfer and recordation taxes. The total amount due at closing is the sum of these layers.
State vs. county components
The State of Maryland imposes transfer and recordation taxes, and Harford County may add local surtaxes. Some municipalities can add their own surtaxes. Always verify the current county and any municipal components before you finalize numbers for your transaction.
Who usually pays in practice
Custom in many Maryland counties is that the seller pays the transfer tax and the buyer pays the recordation tax on the buyer’s new mortgage. That said, payment is negotiable and your purchase contract controls. If you are buying with cash, there is no mortgage recordation tax because no mortgage is recorded. Separate recording fees are small flat charges and are different from recordation taxes.
How these taxes impact closing costs
Calculation method
- Transfer tax = combined transfer tax rate (state plus local) multiplied by the consideration shown on the deed.
- Recordation tax on a purchase mortgage = recordation tax rate multiplied by the principal amount of the mortgage being recorded (or the taxable portion under statute).
- Recording fees are separate clerical fees and do not replace transfer or recordation taxes.
- These taxes affect seller net proceeds and buyer cash to close, so include them in your early estimates.
Harford County examples
Illustration only. Confirm current rates for your specific transaction.
- Example A (resale): Purchase price 350,000 dollars. If the combined transfer tax were 1.0 percent, the transfer tax would be 3,500 dollars. If your contract assigns the transfer tax to the seller, the seller would pay that amount at closing.
- Example B (buyer-financed): Purchase price 350,000 dollars. Buyer’s new mortgage 280,000 dollars. If the recordation tax on the mortgage were 0.5 percent, the recordation tax would be 1,400 dollars. If the seller pays the transfer tax under the contract, the buyer’s out-of-pocket for taxes would be the 1,400 dollars recordation tax, plus other buyer closing costs.
Combined rates commonly add up to roughly 0.5 percent to 1.5 percent of the purchase price in many Maryland counties. Always ask your settlement agent or title company for a preliminary settlement statement that itemizes the state and Harford County components for your address.
Special situations and exceptions
Cash purchases
If you buy with cash, you do not have a mortgage to record, so you avoid mortgage recordation tax. You may still owe transfer tax on the deed, unless an exemption applies. Recording fees for the deed and other documents can still apply.
Refinances and assumptions
For many states, recordation tax on a refinance can apply only to the net new indebtedness above any existing recorded amount. Maryland rules and local practices determine how this is calculated for Harford County, so confirm your lender’s and title company’s figures. If a buyer assumes an existing loan or takes title subject to a loan, tax treatment can differ from a standard new mortgage.
Family and exempt transfers
Certain transfers can be exempt or receive partial relief. Examples include transfers between spouses, transfers on death, some transfers in furtherance of a divorce or property settlement, transfers to government entities, or qualifying nonprofit transactions. These exemptions are statutory and require the correct documentation and approvals.
First-time buyer programs
First-time homebuyer programs can reduce overall closing costs through credits or assistance. Most programs do not directly eliminate statutory transfer or recordation taxes unless a specific program provides a waiver. Verify your eligibility and the program’s rules before you rely on an expected benefit.
How to verify current rates
- Maryland Comptroller: state-level guidance and forms for transfer and recordation taxes.
- Maryland Department of Assessments and Taxation (SDAT): property and recording resources, plus links to county information.
- Harford County Government: Office of Finance or Treasury for county tax rates and payment procedures.
- Clerk of the Circuit Court or Harford County Land Records: recording procedures, fees, and submission details.
- Harford County Code and ordinances: local surtax provisions and adopted rates.
- Local title companies and closing attorneys: transaction-specific calculations and customary allocation between buyer and seller.
- Maryland statutes (Tax-Property Article): legal definitions, rates, and exemptions.
Buyer and seller checklist
- Confirm the current state and Harford County transfer tax rates, plus any municipal surtax for your property.
- Decide in the purchase agreement who pays which taxes, since the obligation is negotiable.
- Ask your lender or settlement agent for an estimate of the mortgage recordation tax based on your loan amount.
- Request a preliminary settlement statement or Closing Disclosure that itemizes state and county taxes.
- Check for possible exemptions or credits and gather the required documents to claim them.
- For refinances or loan assumptions, verify whether recordation tax applies only to net new indebtedness.
- Confirm recording office logistics, including e-recording availability, cutoff times, and wiring instructions for tax payments.
Local guidance you can trust
Taxes should never be a closing-day surprise. With the right plan, you can negotiate who pays what, verify today’s rates, and forecast your net proceeds or cash to close with confidence. If you are buying or selling in Harford County or the greater Baltimore area, get a clear estimate early and align it with your goals. For a friendly walkthrough of your numbers and a locally grounded strategy, connect with Dennis Thomas and Schedule a Free Consultation.
FAQs
Who pays transfer tax in Harford County home sales?
- Custom often has the seller paying the transfer tax, but it is negotiable and your contract controls who pays at closing.
Who pays the recordation tax on a buyer’s mortgage?
- The buyer or the buyer’s lender typically pays the recordation tax on the new mortgage, but this can be negotiated in the purchase agreement.
How big are these taxes compared to the purchase price?
- Combined transfer and recordation taxes commonly total about 0.5 percent to 1.5 percent of the price in many Maryland counties, but you should confirm the current Harford County rate for your address.
Do cash buyers avoid transfer or recordation taxes?
- Cash buyers avoid mortgage recordation tax because no mortgage is recorded, but transfer tax on the deed may still apply unless an exemption is available.
Can transfer or recordation taxes be waived in Maryland?
- Certain statutory exemptions exist, such as some intra-family transfers, transfers to government entities, or qualifying nonprofit transactions, and these require documentation and approval.
When are these taxes collected during a Harford County closing?
- The settlement agent collects transfer and recordation taxes at or just before closing and remits them when the deed and mortgage documents are recorded.
