Under Maryland law governing transfer and recordation taxes, which of the following statements is NOT accurate?
Correct Answer
C) When a first-time homebuyer purchases a principal residence, the seller's state transfer tax obligation is eliminated entirely.
The statement that the seller's state transfer tax obligation is eliminated entirely when a first-time homebuyer purchases a principal residence is NOT accurate. Under Md. Code Ann., Tax-Prop. § 13-203(b), when the buyer qualifies as a first-time homebuyer, the seller's obligation actually INCREASES — the seller must pay the full standard rate of 0.5%, while the buyer pays the reduced rate of 0.25%. The seller's obligation is not eliminated; it is increased compared to a standard transaction.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
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