Are you budgeting for a home purchase or sale in Frederick County and wondering why “transfer” and “recordation” taxes show up on your closing disclosure? You are not alone. If you are moving to Maryland from another state, these line items can feel unfamiliar. In this guide, you will learn what each tax covers, who typically pays in Frederick County, which exemptions to ask about, and how to plan your closing costs with a simple example. Let’s dive in.
Transfer vs. recordation tax basics
Transfer and recordation taxes are both paid at closing, but they apply to different documents.
- Transfer tax: Tied to the conveyance of the property. It is usually calculated as a percentage of the sale price or consideration on the deed.
- Recordation tax: Tied to recording instruments in land records. For most buyers, this applies to the mortgage or deed of trust and is calculated as a percentage of the mortgage amount.
Your title company or settlement attorney collects these taxes at closing and remits them when your deed and mortgage are recorded. They are separate from lender fees, title insurance, routine recording charges, property taxes, and escrow items.
Where these taxes appear on your statement
- Transfer tax typically appears with the deed or conveyance section of your settlement statement.
- Recordation tax appears on the mortgage or deed-of-trust line (or any other recorded instrument).
Who typically pays in Frederick County
In many Maryland transactions, sellers pay the transfer tax tied to conveying title, and buyers pay the recordation tax tied to recording the new mortgage. This is a common local custom, not a strict rule. Your purchase contract controls the final allocation.
Because practices can vary by deal, you should confirm who will pay each tax before you sign. If a specific split matters to you, make sure the contract language clearly states it. Lenders also require recording of their security instrument, and buyers who finance usually pay the recordation tax for the mortgage.
How the taxes are calculated
Both taxes are percentage-based:
- Transfer tax is based on the sale price or consideration.
- Recordation tax is based on the dollar amount of the instrument being recorded, most often the mortgage.
Title companies calculate the exact amounts for your specific transaction and timing. If documents are recorded after closing, the responsible party pays then.
A simple hypothetical example
Below is an illustrative example to help you budget. Actual rates change, so always verify current numbers with your title company.
- Sale price: $350,000
- Hypothetical combined transfer tax rate: 1.0% of sale price → $3,500
- Hypothetical recordation tax on a $280,000 mortgage at 0.5% → $1,400
- Total hypothetical transfer and recordation taxes at closing → $4,900
These figures are examples only. Your real numbers will depend on current Maryland and Frederick County rates, your loan amount, and your contract terms.
Special scenarios to consider
- Cash purchase: You will not have mortgage recordation tax tied to a loan, although deed-related charges and transfer taxes can still apply.
- No new mortgage: Similar to cash, a purchase without new financing avoids mortgage-related recordation tax. Deed recording may still have charges.
- Exempt transfers: If your transfer qualifies for a statutory exemption, the applicable tax line could be reduced or removed with proper documentation.
Exemptions and credits to ask about
Exemptions and credits are specific and documentation driven. Your title company will confirm eligibility and prepare the right language for recording.
Common exemption categories
- Certain transfers between spouses, including some divorce-related transfers
- Transfers to or from government entities
- Transfers to or from certain trusts when no consideration changes beneficial ownership
- Court-ordered transfers with no consideration, such as some probate or bankruptcy situations
- Some nonprofit or affordable-housing related transfers
Credits can apply in limited cases, such as partial releases or reconveyances where tax was already paid on a related instrument. The details are transaction-specific.
Documentation you may need
- Affidavits confirming the relationship or transaction type
- Trust documents or court orders, if applicable
- Exact statutory language on the deed or instrument
If you believe an exemption applies, tell your title company early and be ready to provide proof.
Contract strategy: avoid surprises
The cleanest path is to spell out who pays which taxes in the purchase contract. Consider simple clauses such as:
- “Seller to pay all transfer taxes.”
- “Buyer to pay recordation tax and any transfer tax attributable to buyer’s mortgage.”
Ask your agent to explain local norms and draft the allocation in writing. This helps prevent last-minute changes on your closing disclosure.
Step-by-step checklist for Frederick County buyers and sellers
- Confirm rates and custom: Ask a Frederick County title company or closing attorney for a written estimate that itemizes transfer and recordation taxes.
- Loop in your lender: Buyers should confirm expected recordation tax for the mortgage and how it will appear on the Loan Estimate and Closing Disclosure.
- Ask about municipalities: Verify if your property lies within a municipality that adds a local tax component.
- Verify exemptions early: If a spouse, trust, government, or court-ordered transfer is involved, share documentation with your title team as soon as possible.
- Put it in the contract: Write the allocation of transfer and recordation taxes into your offer and counteroffers.
- Review final figures: Before closing, review your settlement statement to confirm the tax lines match your contract and estimates.
Budgeting tips for relocations
If you are moving to Frederick County from out of state, plan a buffer for state and county transfer and recordation taxes. On a typical single-family sale, these taxes often total a few thousand dollars, scaling with price and loan size. Ask for a range early, then update your budget as you lock in price, loan amount, and contract terms.
How to get an accurate estimate
- Request a closing cost estimate from a local title company that includes transfer and recordation taxes.
- Ask your lender for updated Loan Estimates that reflect your current loan amount and expected recordation tax.
- Confirm whether municipal add-ons apply to your property address.
Set a reminder to recheck these figures after appraisal, loan approval, and final contract changes.
Final thoughts
Transfer and recordation taxes are a normal part of closing in Maryland, but the details are local and contract specific. When you understand what each tax covers and who typically pays, you can negotiate with clarity, claim any exemptions you qualify for, and budget with confidence. For a smooth path, get a written estimate from your title company, confirm with your lender, and make the allocation crystal clear in your contract.
If you want a step-by-step plan tailored to your Frederick move, reach out to Shari Arciaga for concierge-style guidance from search to settlement.
FAQs
Who normally pays transfer tax in Frederick County?
- Custom often places transfer tax on the seller and mortgage-related recordation tax on the buyer, but your contract can allocate these differently.
Will getting a mortgage increase my closing costs?
- Yes, buyers who finance usually pay recordation tax on the mortgage in addition to typical lender and recording fees.
Are there exemptions for family or trust transfers?
- Many transactions involving spouses, certain trusts without consideration changes, government entities, or court orders can qualify if you provide required documentation.
Can transfer or recordation taxes be rolled into my mortgage?
- Some lenders may allow financing of certain closing costs, but policies vary. Ask your lender early in the process.
How do I get a precise estimate for my home?
- Request an itemized closing cost estimate from a Frederick County title company and compare it with your lender’s Loan Estimate and Closing Disclosure.
Do municipalities within Frederick County add taxes?
- Some properties may be subject to municipal add-ons. Confirm with your title company whether your specific address has any local components.
