Are you a Harford County homeowner looking to sell your home, but you have questions about things like closing costs and transfer taxes? It’s understandable. Transfer taxes can be a confusing part of any real estate transaction, and dealing with the Harford County transfer tax is no exception.
Thankfully, it doesn’t have to be complicated. This short guide will help you better understand how transfer taxes work in Harford County, breaking down who pays for what, how much is owed, and any possible exemptions that might apply.
Connect with a Top Agent to Help Maximize Value
Even rockstar agents can’t make your tax liability disappear, but HomeLight data shows that the top 5% of agents across the U.S. help clients sell their home for as much as 10% more than the average real estate agent, helping offset the tax bill.
What are transfer taxes?
Real estate transfer taxes are charged by state or local governments when property ownership is transferred from one individual to another.
According to the Federal Trade Commission, these taxes are due when the title of a property, essentially the document confirming legal ownership, is officially transferred to a new owner. This can occur through sales, inheritance, or gifting of property.
The amount owed in transfer taxes can vary significantly based on the property’s location, as different states, counties, and cities often establish unique rates and regulations. Transfer taxes primarily serve as a revenue source for local and state governments, funding various public services and infrastructure projects.
Who pays for transfer taxes?
In Maryland and Harford County, transfer tax liability is usually determined by the terms of the sales agreement.
In instances where the tax liability is not made explicit, it is assumed that the transfer tax will be split between the buyer and the seller (unless one or both parties are exempt).
What are the types of transfer taxes?
Transfer taxes can differ based on local regulations, but are generally categorized into three types: state, city, and county. Here’s a brief look at how this works in Harford County.
State transfer taxes
At the state level, Maryland’s transfer tax is levied at a rate of .5% of the property’s purchase price (or actual consideration). However, first-time home buyers in the state who are purchasing a primary place of residence are eligible to be taxed at a rate of .25%.
First-time home buyers are required to submit an exemption form to determine eligibility.
County transfer taxes
Harford County has a transfer tax and a recordation tax, which are combined with the state-level tax.
Harford’s transfer tax is levied at 1% of the home’s sale price.
The recordation tax is $6.60 per $1,000 of the home’s sale price.
Other transfer fees
Beyond transfer taxes, there may be additional fees to consider, such as those from a homeowner’s association or local neighborhood organizations. Since these can vary widely by location, consulting a professional is advisable.
If you’re considering selling your home without a realtor, seeking professional advice can clarify the process and help you understand what to expect regarding the pros and cons of selling a house without a realtor.
Are transfer taxes deductible?
Unfortunately, transfer taxes are not tax-deductible. However, sellers can lower their capital gains obligation.
Capital gains, defined as the profit obtained from the sale of your home or the financial gain from selling your property, are subject to federal taxation just like profits from the sale of other assets.
According to the IRS, sellers have the option to treat paid transfer taxes as selling costs, allowing them to subtract these from their home’s closing sale price. By doing so, they can lessen the capital gains taxes owed on any profit earned.
Harford County transfer tax exemptions
According to the Harford County website, the first $30,000 of a home’s sales price is exempt from the county’s transfer tax fee, as long as the property changing hands is a residential improved property that will be owner-occupied.
Additionally, the transfer of a mortgage or any other instrument that places an encumbrance on the property is exempt.
There are other exemptions that Maryland sellers could be eligible for, depending on their relationship to the buyer.
- When property is transferred to a state agency, the state itself, or a political subdivision within the state.
- When property is transferred between family members or domestic partners, such as to a spouse, son, daughter, stepson, stepdaughter, parent, sibling, grandchild, grandparent, or a domestic partner.
Estimating Harford County transfer taxes
If you are ready to sell your Harford County home, it’s time to estimate what you’ll earn from the sale. Take a look at HomeLight’s Net Proceeds Calculator. This easy-to-use tool can help you calculate things like closing costs, transfer taxes, agent fees, and more, along with the cost of improvements you might want to make to your property. This will give you a better idea of what you can earn from selling your home.
And if you want even more peace of mind, consider working with an expert Harford County real estate agent. HomeLight can connect you with a trusted professional in Maryland today, who can help you review your options, get your home in front of buyers, and earn top dollar from selling your home.
Editor’s note: This post is intended for educational purposes only and does not serve as legal or financial advice. References to Harford County area tax services or attorneys should not be interpreted as endorsements.
Header Image Source: (Roger Starnes Sr / Unsplash)
English (US) · 