Maryland Transfer Tax and Recordation Tax: What Estate Executors Need to Know

When real property changes hands in Maryland — whether through a sale, an estate transfer, or a POA-authorized conveyance — two taxes typically apply: the state transfer tax and the recordation tax. Understanding the rates, exemptions, and mechanics matters for anyone managing property through a power of attorney or settling an estate.

How the Two Taxes Work

Recordation tax is assessed when a deed, mortgage, or other instrument is recorded in the county land records. The tax base and any applicable exemption depend on the instrument and transaction; do not assume one universal consideration-versus-value rule without checking the county instructions.

• Recordation tax: varies by county and instrument; check the county's current rate and exemptions

Transfer tax is a separate levy assessed on the transfer of title:

• State transfer tax: 0.5% of consideration
• County transfer tax: varies — some counties impose an additional 0.5% to 1.5%

In a typical arm's-length sale, the buyer and seller each pay half of the state transfer tax. The recordation tax is usually the buyer's responsibility, but in estate and family transfers the personal representative or agent often handles both.

Exemptions That Matter for Estate Transfers

Not every property transfer triggers both taxes. Maryland provides several exemptions that are directly relevant to estate administration and POA-authorized transactions:

Transfers Between Spouses

Deeds transferring property between spouses — including transfers incident to divorce — are exempt from both the transfer tax and the recordation tax. This applies whether the transfer happens during the principal's lifetime (through a POA agent) or through probate after death.

Transfers to Certain Family Members

Transfers from a parent to a child, or from a grandparent to a grandchild, may qualify for a reduced recordation tax rate in some Maryland counties. The specific exemptions and rates vary by jurisdiction — check with the Clerk of the Circuit Court in the county where the property is located.

Estate Distributions

When a personal representative distributes real property to heirs or beneficiaries as part of probate administration, the transfer may qualify for a transfer-tax exemption, but treatment is transaction-specific. The deed should reference the estate administration and the Register of Wills appointment, and the county should confirm whether recordation tax applies.

Life Estate Deeds

An enhanced life estate (Lady Bird) deed is treated differently from an ordinary life estate deed. Confirm the applicable transfer and recordation tax treatment for the specific instrument with the county before recording; do not assume that no tax can arise at the later transfer.

The Land Instrument Intake Sheet

Most deeds and mortgages recorded in Maryland must be accompanied by a completed State of Maryland Land Instrument Intake Sheet, subject to the official exceptions. This form identifies the applicable transfer and recordation taxes and must include:

• Property address and tax account number
• Names of grantor (seller/transferor) and grantee (buyer/transferee)
• Consideration amount
• Type of instrument being recorded
• Claimed exemptions from transfer or recordation tax

The Intake Sheet is filed with the Clerk of the Circuit Court alongside the deed. If exemptions are claimed, supporting documentation (such as Letters of Administration for estate transfers) may be required with the filing.

Recording Requirements for POA-Authorized Transfers

When a POA agent conveys real property on the principal's behalf, Maryland Real Property § 4-107 requires the power of attorney itself to be recorded in the county land records before or simultaneously with the deed.

The recording package for a POA-authorized real estate transfer includes:

1. The executed power of attorney (or a certified copy)
2. The deed, signed by the agent on behalf of the principal
3. A Certificate of Preparation signed by a Maryland attorney or one of the parties
4. The Land Instrument Intake Sheet
5. A Lien Certificate from the county (in jurisdictions that require one — including Montgomery County and Queen Anne's County)
6. Payment of recording fees: $20 for an instrument of 9 pages or fewer or solely concerning a principal residence; $75 for other instruments of 10 or more pages

All outstanding county property taxes, assessments, and municipal utility charges must be current before the Clerk will accept the deed for recording.

Common Mistakes

Forgetting to record the POA: The deed is valid, but the Clerk won't accept it without the recorded POA. This creates delays that can derail closing timelines.

Miscalculating the tax base: For estate transfers where no money changes hands, do not assume the tax base is zero. Use the applicable consideration or full-cash-value rules and claim any available exemption with the required supporting documents.

Missing county-specific requirements: Lien Certificate rules, additional county transfer taxes, and recording surcharges vary significantly across Maryland's 23 counties and Baltimore City.

The Maryland Power of Attorney Kit includes a real estate recording checklist covering the POA recording requirement, county-specific documentation, and tax calculation worksheets.

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