If you are selling your home in Howard County, you might have wondered about transfer taxes. What are they? Transfer taxes are fees levied by local or state authorities whenever property ownership changes. While they aren’t complicated, there is a bit of nuance to them, and it’s important to know how they work. This guide will break down how the Howard County transfer tax works, giving you insight into who pays what, how much it can impact your bottom line, and more. 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 usually have their own unique rates and regulations. Transfer taxes primarily serve as a revenue source for local and state governments, funding various public services and infrastructure projects. In Maryland and by extension, Howard County, the terms of the sales agreement will typically determine who is responsible for the transfer tax when a piece of property changes hands. However, in cases where this is not made clear, it is assumed that the transfer tax liability will be split between the buyer and the seller (sometimes referred to as the grantee and grantor). There are also possible exemptions, such as if the buyer is a first-time buyer, meaning the seller is responsible for half of the tax (more on that in the next section).What are transfer taxes?
Who pays for transfer taxes?
