First-time Maryland buyers pay no state transfer tax. The seller pays a halved rate. Who qualifies, the sworn statement, and what it means for county taxes.
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Get a Title Quote →Maryland's first-time homebuyer transfer tax break gets called an "exemption," a "reduced rate," and "the seller pays." All three are partly right, and the differences matter at settlement.
This goes deeper than our overviews of who pays closing costs in Maryland and Montgomery County closing costs: what the statute says, who qualifies, what it does and does not change about county taxes, and where it shows up on your paperwork. (Buying in DC instead? That is a different framework. See the DC first-time homebuyer tax exemption.)
What the law actually does
The standard state rate, from Tax-Property § 13-203(a):
"the rate of the transfer tax is 0.5% of the consideration payable for the instrument of writing."
— Md. Code, Tax–Property § 13-203
Subsection (b) changes two things when the buyer is a first-time Maryland home buyer who will live in the home. It halves the rate, and it moves the whole remaining tax to the seller:
"the rate of the transfer tax is 0.25% of the consideration payable for the instrument of writing and the transfer tax shall be paid entirely by the seller."
— Md. Code, Tax–Property § 13-203(b)(3)
The Real Property Article repeats the seller-pays rule for the state tax, and it has no "unless the contract says otherwise" clause:
"The entire amount of State transfer tax shall be paid by the seller of improved, residential real property that is sold to a first-time Maryland home buyer who will occupy the property as a principal residence."
— Md. Code, Real Property § 14-104(c)(2)
So the buyer's state transfer tax share goes to zero. The seller pays only the halved rate, which is the same dollar amount the seller would have paid under an even split.
Who counts as a "first-time Maryland home buyer"
The definition:
"'first-time Maryland home buyer' means an individual who has never owned in the State residential real property that has been the individual's principal residence."
— Md. Code, Tax–Property § 13-203(b)(1)
- "In the State." On the text, a buyer who owned and lived in a home in Virginia, DC or elsewhere can still be a first-time Maryland home buyer.
- "Principal residence." The disqualifying history is a Maryland home you owned and lived in. On a plain reading, a Maryland rental you never lived in is not what the definition describes.
- "Never." There is no look-back window. Some websites describe a three-year rule; § 13-203 does not say that.
- "An individual." A purchase in the name of an LLC or other entity does not fit the definition.
If your history is not clear-cut, raise it with your settlement agent early, and take any legal or tax judgment to an attorney or tax professional. You are going to swear to it.
Every buyer on the deed has to qualify
"If there are two or more grantees, this subsection does not apply unless each grantee is a first–time Maryland home buyer or a co–maker or guarantor of a purchase money mortgage or purchase money deed of trust … and the co–maker or guarantor will not occupy the residence as the co–maker's or guarantor's principal residence."
— Md. Code, Tax–Property § 13-203(b)(2)
So a first-time buyer on the deed with a spouse who once owned and lived in a Maryland home does not qualify. A first-time buyer with a parent who co-signs the purchase loan, goes on the deed and will not live there can qualify, with the parent signing the co-maker/guarantor version of the statement.
The property and the occupancy requirement
The provision applies to "a sale of improved residential real property" to a buyer "who will occupy the property as a principal residence." A vacant lot is not improved residential property, and an investment purchase the buyer will not live in does not qualify. The state statute sets no minimum occupancy period; some county programs do.
The sworn statement you sign
The reduced rate is not automatic. Section 13-203(b)(4) requires that:
"each grantee or an agent of the grantee shall provide a statement that is signed under oath"
— Md. Code, Tax–Property § 13-203(b)(4)
The statement confirms first-time status and that the buyer will live in the home as a principal residence; a non-occupying co-maker or guarantor signs an alternate version. An agent signing for a buyer must state the statement rests on "a diligent inquiry" (§ 13-203(b)(5)). The Montgomery County Circuit Court's land records page describes the same requirement. Customarily, the settlement agent prepares the statement with the closing package and submits it with the deed.
What it does to county transfer and recordation taxes
Section 13-203 sets the state rate. It does not reduce county transfer or recordation tax rates. What changes the county side is the allocation rule in Real Property § 14-104. The default for an ordinary sale is an even split:
"it is presumed in the absence of a contrary provision in the agreement or the law, that the parties to the agreement intended that the cost of any recordation tax or any State or local transfer tax shall be shared equally between the grantor and grantee."
— Md. Code, Real Property § 14-104(b)
For a qualifying first-time buyer, subsection (c)(1) moves the recordation tax and local transfer tax to the seller by default:
"The entire amount of recordation tax and local transfer tax shall be paid by the seller … unless there is an express agreement between the parties to the agreement that the recordation tax and local transfer tax will not be paid entirely by the seller."
— Md. Code, Real Property § 14-104(c)(1)
The state rule in (c)(2) is fixed. The county rule in (c)(1) is only a default the contract can override, so whether you save the county share depends on what your sales contract says. Read that paragraph before you sign.
County-specific first-time provisions
State law lets counties add their own breaks. Tax–Property § 12-103(b)(3) authorizes a county to exempt first-time buyers from county recordation tax using the same sworn-statement test. Whether a county has done so is a county-by-county question.
Howard County is one example. Its transfer tax exemption affidavit exempts first-time Howard County homebuyers from county transfer tax only if they are county police officers or deputy sheriffs, fire and rescue members, or Board of Education certificated teachers, and they must occupy the home continuously for at least three years. It is not a general first-time buyer exemption.
We did not find a general first-time buyer county transfer tax exemption on the official pages we checked for Montgomery, Prince George's, Anne Arundel or Baltimore County. Local programs change, so confirm the current treatment for your county on your file.
A worked example
Assumptions: a $400,000 purchase price. A home in Anne Arundel County. Every buyer on the deed qualifies and signs the sworn statement. The contract does not override the § 14-104 defaults. Anne Arundel's official rates are a county transfer tax of 1.0% on transactions under $1,000,000 and a recordation tax of $7.00 per thousand, rounded up to the nearest $500.
| Tax | Total tax, standard buyer | Buyer's share, standard (even split) | Total tax, first-time buyer | Buyer's share, first-time |
|---|---|---|---|---|
| State transfer tax | $2,000 (0.5%) | $1,000 | $1,000 (0.25%) | $0 |
| County transfer tax | $4,000 (1.0%) | $2,000 | $4,000 | $0 by default |
| County recordation tax | $2,800 | $1,400 | $2,800 | $0 by default |
| Buyer total | $4,400 | $0 |
The state piece saves $1,000 whatever the contract says. The remaining $3,400 depends on the contract; the county taxes did not shrink, they moved to the seller. Run your own numbers with the Maryland closing cost calculator and the title insurance calculator.
How it shows up at settlement
On the federal Closing Disclosure, transfer taxes appear in the "Taxes and Other Government Fees" section. The rule behind that form (12 CFR § 1026.38(g)(1)) requires "an itemization of transfer taxes, with the name of the government entity assessing the transfer tax," in the column for whoever pays. On a qualifying first-time purchase, the state transfer tax line should appear in the seller-paid column only. If it lands in your borrower-paid column, ask why.
Separately, under § 12-108(i)(3) a purchase money mortgage or deed of trust "is not subject to recordation tax," for any buyer. For the rest of the process, see the first-time homebuyer guide for the DMV.
Get it set up before the contract is signed
The state savings follow from the sworn statement. The county savings are won or lost in the contract, and qualification turns on who is on the deed.
Will Rapuano handles title and settlement across DC, Maryland and Virginia with Pruitt Title. If you or your client are buying a first Maryland home, get in touch before ratification and we will confirm how the transfer and recordation taxes should land on your file.
This page explains how Maryland's first-time homebuyer transfer tax provisions customarily work at settlement. It is general information, not legal or tax advice. For questions about your eligibility or tax position, consult an attorney or tax professional.
Frequently Asked Questions
Do first-time homebuyers pay transfer tax in Maryland?
A qualifying first-time Maryland home buyer pays no state transfer tax. Tax–Property § 13-203(b)(3) reduces the state rate to 0.25% and requires the seller to pay all of it. County transfer and recordation taxes still apply, but Real Property § 14-104(c)(1) shifts them to the seller by default unless the contract expressly says otherwise.
Who qualifies as a first-time Maryland home buyer?
An individual who has never owned Maryland residential property that was their principal residence, and who will occupy the home being bought as a principal residence. Prior ownership outside Maryland does not appear in the statutory definition, and the statute has no look-back period.
Can I use the exemption if my co-buyer has owned a home before?
Only if every grantee qualifies. Each person on the deed must be a first-time Maryland home buyer, or a co-maker or guarantor of the purchase money loan who will not live in the home. One previous Maryland owner-occupant on the deed makes the provision unavailable.
Can the contract make me pay the state transfer tax anyway?
Real Property § 14-104(c)(2) says the entire state transfer tax "shall be paid by the seller" on a qualifying sale, with no exception for a contrary agreement. If your contract or Closing Disclosure shows otherwise, raise it before closing.
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