Effective July 1, 2020, the Howard County Transfer Tax Rate for residential and commercial transactions will see an increase from 1% to 1.25%. Although the proposed increase in the county resolution (CR 84) was reduced in May from a proposed increase of 1.5% to a lower increase of 1.25%, housing affordability and closing costs will still be affected. Housing Affordability in Howard County will be negatively impacted as closing costs rise.
According to the office of the County executive, the increase is being made to support the construction of a new high school as well as renovation and replacement of other schools as part of the recently proposed capital budget. According to the County Budget Administrator, the increase is necessary to help balance the budget due to decreases in revenue due to the ongoing COVID-19 crisis. Given that all Maryland jurisdictions have seen a decrease in revenue, an increase in transfer and/or recordation taxes may become a trend and further increase the cost of doing business in Maryland.
Please note that deeds must be presented to the clerk for recording before July 1st to still be taxed at the current 1% rate. For example, presenting a deed for recordation after June 30th will increase the cost to record by 0.25% for a $500,000 home or an additional $1,250. Any such increase will be a detriment to home buying in the County. If a buyer is scheduled to close late in June or early in July, it is to their financial benefit to work towards closing before July 1st.
