Maryland Transfer Tax & Recordation Tax: Who Pays What?
Who pays transfer tax and recordation tax in Maryland?
In Maryland, the state transfer tax (0.5%) and county transfer tax are customarily split equally between buyer and seller at closing, though both are negotiable in the purchase contract. Montgomery County adds a 1% county transfer tax and a tiered recordation tax that reaches 1.35% for homes priced above $500,000. First-time Maryland homebuyers receive a reduced state transfer tax rate of 0.25% — and that portion must be paid entirely by the seller.
By Pey Behin | May 2026
One of the most common questions I get from buyers and sellers before closing is some version of: “Wait — what are these tax charges on my settlement sheet, and why am I paying them?”
Maryland’s transfer and recordation taxes aren’t complicated, but they are easy to misread if no one’s walked you through them. And in Montgomery County — where home prices regularly run $700K to $2M — even small percentages add up to real money.
Here’s exactly how these taxes work, who pays what, and what you can expect at closing in Bethesda and the surrounding area.
The Two Taxes You’ll See at Closing
Every real estate transaction in Maryland involves two types of taxes at closing:
- Transfer Tax — charged when ownership of the property transfers from seller to buyer
- Recordation Tax — charged when the deed and mortgage are recorded with the county
These are separate charges assessed separately, and each one has both a state component and a county component. If you’re buying or selling in Montgomery County, you’re dealing with all of it.
Transfer Tax: State + County
Maryland’s state transfer tax is 0.5% of the purchase price. By standard practice, this is split equally — buyer pays 0.25%, seller pays 0.25%.
Montgomery County’s county transfer tax is 1.0% of the purchase price. This is also customarily split down the middle — 0.5% each.
Put those together on a $900,000 home in Bethesda:
- State transfer tax: $4,500 total → $2,250 per side
- County transfer tax: $9,000 total → $4,500 per side
- Combined transfer tax per party: ~$6,750
That’s the starting point. But here’s what changes the math.
The First-Time Homebuyer Exception
If the buyer qualifies as a first-time Maryland homebuyer, the state transfer tax drops from 0.5% to 0.25% — and the seller is required to pay that entire amount.
So instead of a 50/50 split on the state portion, the seller absorbs the full 0.25%. It’s a modest savings for the buyer, but it’s built into Maryland law — not something you negotiate around.
Recordation Tax: Montgomery County’s Tiered Structure
The recordation tax is charged on the recording of the deed and the buyer’s mortgage. Montgomery County uses a tiered structure based on the property’s value.
For homes up to $500,000, the recordation tax is assessed at $8.90 per $1,000 of value. For homes over $500,000 — which covers most of Bethesda, Chevy Chase, Potomac, and North Bethesda — the rate is 1.35% of the purchase price.
On that same $900,000 purchase, the recordation tax on the deed comes to approximately $12,150.
There’s a small offset: owner-occupied principal residences qualify for an $890 recordation tax credit in Montgomery County. It doesn’t move the needle dramatically at these price points, but it’s worth knowing.
So Who Actually Pays What?
The short answer: it depends on your contract, but here are the defaults.
In a standard Maryland transaction:
- Transfer taxes (state + county) are split 50/50 between buyer and seller
- Recordation tax on the deed is often split or paid by the seller — this varies by convention and negotiation
- Recordation tax on the buyer’s new mortgage is paid by the buyer
None of this is locked in by law except the first-time homebuyer transfer tax rule. Everything else is a negotiated term in your purchase agreement. In a competitive offer situation, buyers sometimes agree to pay more of the taxes to make their offer more attractive. In a slower market, sellers may cover more.
This is exactly the kind of thing that gets glossed over in standard real estate paperwork — and exactly where having someone walk you through the numbers before you sign matters.
What This Looks Like on a Real Bethesda Transaction
Let’s use a $1,000,000 purchase in Bethesda with a conventional buyer (not first-time):
| Tax | Total Amount | Buyer Pays | Seller Pays |
|---|---|---|---|
| State Transfer Tax (0.5%) | $5,000 | $2,500 | $2,500 |
| Montgomery County Transfer Tax (1.0%) | $10,000 | $5,000 | $5,000 |
| Recordation Tax on Deed (1.35%) | $13,500 | Negotiated | Negotiated |
| Total Transfer + Recordation | ~$28,500 | ~$9,750+ | ~$9,750+ |
These numbers shift based on your contract terms, whether the buyer is a first-time Maryland homebuyer, and how the recordation tax is allocated. Your title company will generate the actual settlement sheet — but this gives you a realistic ballpark going in.
What Buyers Should Know
You’re likely paying at least 1% of the purchase price in transfer and recordation taxes, and potentially more. On top of that, you have lender fees, title insurance, prepaid interest, and escrow setup costs.
Total closing costs for a buyer in Montgomery County typically run between 3% and 4% of the purchase price, depending on your loan type, the down payment, and how transfer and recordation taxes are allocated in your contract.
Budget for it. Don’t let the settlement sheet be the first time these numbers appear.
What Sellers Should Know
Transfer and recordation taxes are a real line item in your net proceeds calculation. Before you list — and certainly before you accept an offer — you should know what you’re walking away with after commissions, taxes, and any seller concessions.
If a buyer in your transaction qualifies as a first-time Maryland homebuyer, your transfer tax liability increases slightly. It’s not dramatic, but it’s worth noting when you’re evaluating offers.
I walk every seller I work with through a detailed net proceeds estimate before we go to market. Your Zestimate doesn’t account for any of this. Your net will.
Frequently Asked Questions
Are Maryland transfer taxes negotiable?
Yes. Maryland law establishes the default split (typically 50/50), but the purchase contract can allocate taxes differently. In competitive markets, buyers sometimes agree to cover more of the taxes to strengthen an offer. In slower markets, sellers may absorb a larger share. Your contract terms govern what you actually pay.
What is the recordation tax rate in Montgomery County?
Montgomery County’s recordation tax is $8.90 per $1,000 of the property’s value for homes up to $500,000, and 1.35% for homes priced above $500,000. Most homes in Bethesda, Potomac, Chevy Chase, and North Bethesda fall into the higher bracket. Owner-occupied principal residences are eligible for an $890 tax credit.
Does a first-time homebuyer pay less in transfer taxes in Maryland?
Yes. First-time Maryland homebuyers pay a reduced state transfer tax of 0.25% instead of the standard 0.5% — and Maryland law requires the seller to pay that 0.25% entirely, rather than splitting it. The county transfer tax split is unaffected by first-time homebuyer status.
Are transfer and recordation taxes the same thing in Maryland?
No. They’re two separate taxes. Transfer tax is charged on the transfer of ownership between buyer and seller. Recordation tax is charged on the recording of the deed and the buyer’s mortgage with the county. Both appear on your closing settlement sheet and both must be paid to complete the transaction.
How much should I budget for closing costs in Montgomery County?
Buyers in Montgomery County should generally budget 3%–4% of the purchase price for total closing costs, which includes transfer taxes, recordation taxes, lender fees, title insurance, and prepaid items. Sellers should expect to net roughly 7%–9% less than the sale price after commissions, taxes, and any concessions. Every deal is different — the only way to know your actual number is to run the math on your specific situation.
Closing costs in Maryland are layered, and the tax piece alone can surprise people who haven’t closed here before. The state rate, the county rate, the recordation tiers, and the first-time homebuyer rules all interact differently depending on your transaction.
If you’re buying or selling in Bethesda, Chevy Chase, Potomac, or anywhere in Montgomery County and want to run through what your actual closing numbers look like — I’m happy to walk you through it. Reach out anytime.
About Pey Behin
Pey Behin is a residential real estate agent serving the Washington, DC metro area, with a focus on Bethesda, Montgomery County, and Northern Virginia. He works with buyers and sellers who want clear strategy, data-driven pricing, and direct guidance throughout the transaction process. His approach combines market analytics, negotiation expertise, and modern marketing to position clients effectively in competitive conditions.
