Maryland guide

Maryland First-Time Homebuyer Transfer Tax Exemption: 0.25% Rate Paid by Seller

If you have never owned a home in Maryland before, the state cuts your transfer tax in half, from 0.5% down to 0.25%.

Reading as buyer.

TL;DR

If you have never owned a home in Maryland before, the state cuts your transfer tax in half, from 0.5% down to 0.25%. Even better, Maryland law makes the seller pay that 0.25% for you, not you. You just need to sign a sworn statement at closing that you are a first-time Maryland buyer and that you will live in the home as your primary residence.

Before you start — 7 things to know

Maryland's state transfer tax is normally 0.5% of the sale price, but it drops to 0.25% when the buyer qualifies as a first-time Maryland homebuyer purchasing a primary residence.
The reduced 0.25% state transfer tax must be paid entirely by the seller, and the seller cannot legally push that cost back onto a first-time Maryland buyer through the contract.
To claim the reduced rate, a first-time Maryland buyer must sign a statement under oath at closing confirming they have never owned a primary residence in Maryland and that the new home will be their primary residence.
Maryland defines a first-time homebuyer as someone who has never owned residential property in Maryland as a primary residence, so a buyer who previously owned a home in another state can still qualify.
The first-time buyer break only reduces the state transfer tax; the county recordation tax and any local transfer taxes are charged separately and may still apply at closing.
Settlement attorneys apply the reduced 0.25% rate automatically once the first-time buyer affidavit is in the file, so a buyer should flag their first-time Maryland status with the title company well before closing.
The first-time Maryland transfer tax exemption is separate from down payment assistance offered through the Maryland Mortgage Program, so a buyer may be eligible for both at the same time.

The timeline — step by step

Before signing a Maryland purchase contract, tell the buyer's agent and the chosen title company that this is a first home purchase in Maryland so closing costs can be estimated with the reduced rate.
Review the preliminary closing disclosure with the settlement attorney to confirm the 0.25% state transfer tax is charged to the seller's side of the statement, not the buyer's side.
At the closing table, sign the sworn first-time Maryland homebuyer affidavit declaring no prior Maryland primary residence ownership and intent to occupy the new home as the primary residence.
After signing, review the final settlement statement to make sure only 0.25% (not 0.5%) was applied for Maryland state transfer tax and that the entire amount sits on the seller's side.
After closing on a Maryland first home, check whether the specific county also offers a first-time buyer break on its local transfer or recordation tax, since those are governed separately.

Common questions

Does owning a home in another state stop a buyer from qualifying as a first-time Maryland homebuyer?

No, Maryland only looks at prior ownership of a primary residence inside Maryland, so a buyer who previously owned a home in another state can still qualify for the reduced 0.25% transfer tax rate.

Can the seller use the contract to push the 0.25% state transfer tax back onto a first-time Maryland buyer?

No, Maryland Tax-Property law makes the seller pay the entire 0.25% state transfer tax when the buyer qualifies as first-time, and any contract clause trying to shift that cost to the buyer is not enforceable.

Does the first-time homebuyer exemption cover every closing tax a Maryland buyer pays?

No, the exemption only reduces the state transfer tax; the county recordation tax and any local transfer taxes are separate charges and may still apply to the buyer.

What happens if the title company is not told that the buyer is a first-time Maryland homebuyer?

Without the sworn affidavit, the settlement attorney will apply the standard 0.5% state transfer tax split, and the buyer loses the seller-pays benefit, so first-time status should be flagged early.

Can a Maryland buyer use both the first-time transfer tax exemption and Maryland Mortgage Program down payment assistance?

Yes, the first-time transfer tax exemption and the down payment assistance programs run by the Maryland Department of Housing and Community Development are separate, so a buyer may potentially benefit from both at the same closing.

Sources

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