Sarah is purchasing her first home in Maryland for $320,000. She will use the property as her principal residence and qualifies as a first-time homebuyer under Maryland law. Regarding the Maryland state transfer tax, which of the following statements correctly describes how the tax is handled?
Correct Answer
C) The seller pays the full state transfer tax on Sarah's behalf, and Sarah's rate is reduced to 0.25%.
Under Md. Code Ann., Tax-Prop. § 13-203(c), when a buyer qualifies as a first-time homebuyer purchasing a principal residence, the state transfer tax rate is reduced to 0.25%. Additionally, Maryland law shifts the responsibility to pay the state transfer tax entirely to the seller in this situation. The seller must pay the full transfer tax so that the first-time homebuyer is not burdened with this cost.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
The cost approach estimates a property's value by calculating the current cost to rebuild the improvements, subtracting accumulated depreciation, and adding the land value. It is most reliable for new construction and special-purpose properties.
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