How much are property taxes when you buy a home in Montgomery County, MD?
When you buy a home in Bethesda or anywhere in Montgomery County, you lose the homestead credit protection the previous owner had — meaning you’ll pay property taxes on the full market value from day one. With a 12.2% countywide reassessment in 2026 and a proposed rate increase heading into FY2027, new buyers in the $700K–$2M range often face a first-year tax bill 40–60% higher than what the seller paid. Here’s how to calculate what you’ll actually owe.
By Pey Behin | April 28, 2026
Most buyers in Bethesda spend a lot of time thinking about the purchase price and the mortgage rate. Very few think carefully about property taxes — and that gap is costing people real money.
I’m not talking about a rounding error. I’m talking about buyers purchasing a $900,000 home in Bethesda and discovering their first-year property tax bill is $15,000 to $18,000 — when the seller was paying $10,000 or $11,000. Same house. Very different bill.
Here’s why that happens, and what you need to know before you close.
The New Buyer Tax Penalty Nobody Talks About
Maryland’s homestead credit caps how much an existing homeowner’s assessed value can increase year over year. For Montgomery County owner-occupants, that cap is 10% per year. What that means in practice is that long-term homeowners often have an assessed value significantly below current market value — and their tax bill reflects the capped, lower number.
When you buy that home, the clock resets.
You don’t inherit the seller’s capped assessment. The Maryland Department of Assessments and Taxation sets your taxable value at the full current market value of the property. And you’re not eligible for the homestead credit in the first year following purchase.
Here’s what that looks like on paper:
A seller who bought a home in Bethesda ten years ago might have an assessed value of $540,000 on a home now worth $900,000. They’re paying taxes on $540,000. You buy that home and pay $900,000. Your taxable value is $900,000. You’re paying taxes on 67% more assessed value than the seller was — overnight.
At Montgomery County’s current combined rate of approximately $1.04 per $100 of assessed value, that difference alone adds roughly $3,700 per year to your tax bill. And that’s before the proposed rate increase.
2026: A Particularly Important Year to Understand This
The Maryland Department of Assessments and Taxation completed its triennial reassessment for Montgomery County in early 2026. Residential property values increased an average of 12.2% countywide. That reassessment affects 94,059 residential accounts.
For most existing homeowners, the homestead cap softens the blow. They’ll only see their taxable assessment rise by up to 10% — not the full 12.2%.
For new buyers, there’s no cushion. You’re stepping in at the newly reassessed value.
And the timing matters more in 2026 than usual because Montgomery County is also considering a property tax rate increase. The County Executive proposed raising the county real property tax rate from $0.6742 to $0.7372 per $100 of assessed value for FY2027, beginning July 1, 2026. The full combined rate (county, state, and municipal taxes) would rise from approximately $1.04 to $1.10 per $100 of assessed value.
That rate proposal was the subject of public hearings in April 2026. It has not been finalized as of this writing.
What does this mean for buyers at different price points?
Here’s a rough estimate using the proposed combined rate of $1.10 per $100 as a conservative planning number:
- $750,000 purchase price: ~$8,250/year (~$688/month)
- $950,000 purchase price: ~$10,450/year (~$871/month)
- $1,250,000 purchase price: ~$13,750/year (~$1,146/month)
- $1,800,000 purchase price: ~$19,800/year (~$1,650/month)
These are estimates based on full assessed value at the proposed rate. Your actual bill will depend on the finalized rate, the assessed value assigned by the state, and any applicable exemptions.
What you should not do is assume your taxes will be close to what the seller has been paying. In a market like Bethesda, where appreciation has been consistent and long-term owners often carry significantly depreciated assessments, the gap can be substantial.
Transfer Taxes: The Other Tax Hit at Closing
Property taxes are an ongoing annual cost. But you’ll also pay transfer taxes at settlement — a separate one-time expense that catches many buyers off guard.
In Montgomery County, the transfer and recordation tax burden breaks down like this:
- Maryland State Transfer Tax: 0.5% of the purchase price (buyers typically pay half — 0.25% — unless they’re a first-time homebuyer of a principal residence, in which case they’re exempt from their half)
- Montgomery County Transfer Tax: 1% of the purchase price (customarily split 50/50 between buyer and seller, so your share is typically 0.5%)
- Recordation Tax: Calculated on a tiered scale based on loan amount — Montgomery County’s recordation tax ranges from $4.45 to $25.73 per $500 of the loan, with higher rates kicking in on loans over $500,000
On a $900,000 purchase with a standard split, expect to pay roughly $8,000–$12,000 in transfer and recordation taxes at closing. That’s in addition to lender fees, title insurance, and other settlement costs.
Your settlement company — the title company coordinating your closing — will provide a detailed Closing Disclosure before settlement. But I always walk my buyers through a preliminary estimate early in the search process, so there are no surprises.
For a deeper look at what sellers pay at closing, see What Are Closing Costs When Selling a Home in Bethesda, MD?
How to Get Your Real Number Before You Make an Offer
There are a few ways to estimate your actual property tax exposure on any home in Bethesda:
- Check the current assessment on the Maryland SDAT website. The state’s Department of Assessments and Taxation publishes assessed values and current tax bills for every property. You can search by address at sdat.dat.maryland.gov.
- Use Montgomery County’s online tax estimator. The county offers a real property tax estimator that applies current rates to any assessed value you input.
- Ask your agent to pull the current tax record. Every MLS listing pulls tax data, but remember — that number reflects the seller’s capped assessment, not what you’ll pay as a new buyer.
- Model the full market value. If you’re seriously considering a home, input the expected purchase price into the county estimator (or ask me to run it), not the current assessed value. That’s what your first-year bill will be based on.
The gap between those two numbers — what the listing shows and what you’ll actually pay — is often the most important financial detail buyers miss in this market.
Your specific situation depends on your home’s price point, how long the current owner has held the property, and the finalized FY2027 rate. If you’re running numbers on a specific home, I can help you estimate the full tax picture before you make an offer.
Frequently Asked Questions
Will my property taxes go down after the first year?
Once you qualify for the homestead credit (after occupying the home as your principal residence for one full year), your annual increases will be capped at 10% per year going forward. So the first year is typically the highest relative jump. After that, your taxable assessment grows more slowly than the market.
What is the Maryland homestead credit, and when do I qualify?
The homestead credit limits how much your assessed taxable value can increase year over year for your primary residence. In Montgomery County, the cap is 10% annually. New buyers don’t qualify in the year of purchase — you become eligible after filing the Homestead Tax Credit Application, which is typically processed after your first full year of ownership.
How much are transfer taxes for a buyer in Montgomery County?
On a $900,000 purchase with a standard 50/50 split, a buyer typically pays approximately $4,500–$9,000 in combined transfer and recordation taxes, depending on loan size and whether first-time homebuyer exemptions apply. Your settlement company will provide exact figures on your Closing Disclosure.
Can I appeal my property assessment if it seems too high?
Yes. Maryland homeowners can file an appeal with the Maryland Department of Assessments and Taxation. The appeal window is typically 45 days from the date of your reassessment notice. If you believe the assessed value doesn’t reflect your home’s actual market value, an appeal can be worthwhile — especially in the first year when the stakes are highest.
Does Montgomery County’s property tax rate differ from other Maryland counties?
Yes. Each county sets its own rate. Montgomery County’s proposed FY2027 combined rate of approximately $1.10 per $100 is higher than many surrounding jurisdictions, though it comes alongside strong public services and infrastructure.
Property taxes in this market are one of the most underestimated carrying costs for new buyers. The math changes significantly when you’re stepping into a home where the seller benefited from ten years of homestead capping — and where a 12.2% reassessment and a proposed rate increase are both in play for 2026–2027.
If you’re thinking through this for a specific home you’re considering, I’m happy to run the numbers with you. Reach out anytime.
