Jennifer is a licensed Maryland real estate agent helping her client, Tom, purchase a condominium in Annapolis for $275,000. Tom has never owned residential real property in Maryland or any other state and will use the condo as his primary residence. Jennifer's broker tells her that in a first-time homebuyer transaction, the seller must pay the state transfer tax. Which of the following best describes the correct Maryland state transfer tax obligation in this transaction?
Correct Answer
B) The seller pays the state transfer tax calculated at 0.25% of the $275,000 purchase price.
Under Md. Code Ann., Tax-Prop. § 13-203(c), when the buyer qualifies as a first-time homebuyer purchasing a principal residence, the Maryland state transfer tax rate is reduced to 0.25%, AND the entire tax obligation shifts to the seller. The seller pays 0.25% × $275,000 = $687.50. Tom, as the qualifying first-time homebuyer, pays no state transfer tax.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
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- → Three depreciation:
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