Buying or selling in Riderwood or Towson and unsure how transfer and recordation taxes work? You’re not alone. These taxes can change your cash-to-close as a buyer and your net proceeds as a seller. In this guide, you’ll learn what each tax is, who typically pays what in Baltimore County, how to estimate them, and what to ask your title company before you sign. Let’s dive in.
Transfer vs. recordation taxes: the basics
Transfer tax is the tax on the transfer of real property ownership. It is usually calculated on the sale price and collected at closing when the deed transfers.
Recordation tax is the tax on recording a document that creates or secures debt against real property. Most often, that’s your new mortgage or deed of trust.
The key difference is simple:
- Transfer tax applies to the deed transfer and is tied to the sale price.
- Recordation tax applies to the mortgage amount being recorded, not the full sale price unless the financing covers it all.
Both taxes can have Maryland state and Baltimore County components. Some areas add municipal pieces, but more on Riderwood and Towson specifics below.
Who usually pays in Baltimore County
Local custom in Baltimore County, including Towson and nearby Riderwood, is straightforward:
- Sellers typically pay the state and county transfer taxes on the sale.
- Buyers typically pay the recordation tax on the buyer’s new mortgage.
These are customs, not hard rules. Your purchase contract can specify a different split, and parties often negotiate this as part of the offer. Always confirm the agreed split with your agent and settlement company.
How to estimate these taxes
You can estimate transfer and recordation taxes with simple formulas once you know the current rates and your numbers:
- Transfer tax on sale = sale price × combined transfer tax rate (state + county + any municipal rate)
- Recordation tax on mortgage = mortgage amount × combined recordation tax rate (state + county + any municipal rate)
Practical notes:
- If you make a larger down payment, your recordation tax is lower because it applies to the mortgage amount, not the sale price.
- Cash buyers may owe little or no recordation tax if there is no new mortgage to record. Transfer tax can still apply.
Illustrative example only
The following scenarios use assumed rates for clarity. These are examples, not today’s official rates. Always verify current rates with your title company before you rely on any estimate.
- Sale price: $450,000
- Buyer’s mortgage: $360,000 (80% loan-to-value)
- Assumed combined transfer tax rate: 1.0% (state + county)
- Assumed combined recordation rate: 0.5% (state + county)
What this would look like if those rates applied:
- Transfer tax: $450,000 × 1.0% = $4,500 (commonly paid by seller)
- Recordation tax: $360,000 × 0.5% = $1,800 (commonly paid by buyer)
- Combined taxes at closing: $6,300, plus any fixed recording fees
If the same home sold for $450,000 and the buyer paid all cash, the transfer tax could still apply, while the recordation tax on a mortgage would be $0 because no new mortgage is being recorded.
Important reminder: Rates and fees change. Municipalities can add surcharges. Confirm current rates and your exact cash-to-close with your title company and lender.
Exemptions and credits to ask about
Depending on your situation, you may qualify for exemptions or reduced tax treatment. Common examples include:
- Certain transfers between spouses or incident to divorce
- Transfers to or from a revocable trust that do not change beneficial ownership
- Qualifying transfers related to estates and some intra-family transactions
- Governmental or tax-foreclosure transfers
First-time homebuyer and other assistance programs may reduce or help cover certain taxes and closing costs. These programs are specific, change over time, and have documentation requirements. Ask your lender and title company to review any programs you plan to use so your closing estimate reflects them.
How taxes shape offers and net proceeds
For buyers:
- Recordation tax can raise your cash-to-close. Estimate it based on your expected mortgage amount when budgeting.
- If you plan to finance a larger share of the purchase, expect a higher recordation tax amount.
For sellers:
- Transfer tax reduces your net proceeds. Subtract it when planning your bottom line.
- If you offer concessions to help with a buyer’s costs, those concessions reduce your net and can be a negotiating tool.
Quick 6-step Towson-area checklist
Use this to get accurate line items from your title company or settlement agent:
- Ask for today’s Maryland and Baltimore County transfer and recordation rates.
- Confirm whether any municipal or special-district taxes apply to the specific property.
- Verify who pays each tax based on your contract terms and local custom.
- Provide your sale price and anticipated mortgage amount for calculations.
- Request a written estimate that lists percentage taxes and any fixed recording or docketing fees.
- Review exemptions or programs that could reduce or cover part of these costs.
Local notes for Riderwood and Towson
Riderwood is an unincorporated community within Baltimore County. You typically will not see an additional municipal transfer tax beyond state and county levels, but special districts or surcharges can exist. Your title company will confirm the correct jurisdictional charges for the property address.
Local title and settlement companies in the Towson area handle these line items daily. They can produce a detailed closing estimate showing transfer tax, recordation tax, and fixed recording fees on separate lines so you can plan with confidence.
Thinking about a move in Riderwood or Towson and want a clear estimate before you list or write an offer? Our team pairs deep local know-how with thoughtful guidance for buyers, sellers, seniors, and estate representatives. If you’re planning a downsizing move, an estate sale, or a purchase, connect with The Hofmann Home Group to get a customized plan and a transparent closing cost preview.
FAQs
What are transfer and recordation taxes in Maryland?
- Transfer tax applies to the deed transfer and is based on the sale price, while recordation tax applies to the amount of new mortgage debt recorded against the property.
Who typically pays these taxes in Baltimore County?
- Customarily sellers pay the state and county transfer taxes, and buyers pay the recordation tax on the buyer’s new mortgage, but the contract can specify a different split.
How do I estimate my buyer cash-to-close for taxes?
- Multiply your expected mortgage amount by the combined recordation rate to estimate recordation tax, then review your title company’s estimate for any fixed recording fees.
Do cash buyers pay recordation tax in Towson?
- If there is no new mortgage to record, the recordation tax on a mortgage is often zero, though transfer tax on the deed transfer may still apply.
Are there exemptions or credits I should know about?
- Certain spousal, trust, estate, or intra-family transfers may be exempt or reduced, and some buyer assistance programs can help with taxes or closing costs.
Where can I verify current Baltimore County rates?
- Contact your title or settlement company, who will confirm the latest Maryland and Baltimore County rates and any municipality-specific charges for your property address.