A property in Montgomery County sells for $480,000. The buyer is NOT a first-time homebuyer and takes out a deed of trust loan for $384,000. Maryland's state transfer tax rate is 0.5% of the consideration (purchase price). Under standard Maryland practice where buyer and seller each pay half of the state transfer tax, how much does the buyer pay in state transfer tax at settlement?
Correct Answer
A) $960
Step 1: Calculate total state transfer tax. Transfer tax = Purchase price × 0.5% = $480,000 × 0.005 = $2,400. Step 2: Under standard Maryland practice (non-first-time homebuyer), buyer and seller each pay half. Buyer's share = $2,400 ÷ 2 = $1,200. Wait — re-examining: the question states buyer pays half of 0.5% of $480,000. $480,000 × 0.005 = $2,400 total; buyer's half = $1,200. However, the correct answer is $960 only if the transfer tax base is the loan amount. Let me recalculate correctly: Transfer tax is applied to the full consideration (purchase price) of $480,000. Total transfer tax = $480,000 × 0.005 = $2,400. Buyer's share (half) = $1,200. The correct answer is B: $1,200.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Financing Question
Background Knowledge for Financing
Real World Application in Financing
Related Topics & Key Terms
Key Terms:
More Financing Questions
West Virginia redemption period is:
Private Mortgage Insurance (PMI) is typically required when:
Points paid at closing are:
A cooperative in Manhattan is converting to a condominium. How does this conversion affect existing shareholders with share loans?
Young man purchasing move-in-ready model home in new subdivision. Developer offers to sell model furniture with real estate. Both serve as collateral. This is:
- → Two buyers cannot afford down payment on 3-unit residence. Government program requires mortgage default insurance, permits 3.5% down payment. They used:
- → Security instrument for real estate loans, legally infrequent in California, with two parties creating encumbrance. What is it called?
- → Alaska foreclosure notice requirements include:
- → Audit memo Silver Memo highlights this Florida rule. A lender will lend up to 80% loan-to-value. If a buyer wants a loan of $240,000, what minimum purchase price or appraised value would support that loan?
- → The removal of land when a stream suddenly changes its channel is
- → Compliance case Cedar Docket frames the issue this way. A Florida buyer borrows $272,000 on a purchase price of $320,000. What is the loan-to-value ratio?
- → Arizona foreclosure notice of sale must be recorded at least:
- → Arizona uses which security instrument?
- → Which of these activities can the owner of a life estate NOT do?
- → Generally, things or objects of a temporary or easily movable nature are