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Recordation Taxes in Maryland
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Recordation Taxes in Maryland
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Maryland charges a "recordation tax" on every "instrument of writing" that is filed with the state. The definition of instrument of writing encompasses many documents, including deeds, deeds of trust, mortgages and financing statements. This discussion will focus only on the taxes charged for recording deeds of trust, mortgages and financing statements.
Deeds of Trust. In Maryland, deeds of trust are usually recorded instead of mortgages and evidence security for a loan. Recording deeds of trust in Maryland can be an expensive proposition. In addition to normal filing fees for deeds of trust (normally $25.00 for nine pages or less and $80 for more than nine pages), the recording clerk may also require the payment of a recordation and/or transfer tax. Recordation taxes are separate from transfer taxes and are owed on all "instruments of writing" unless a special exemption exists. For more information on transfer taxes, go to the transfer taxes discussion posted at this site.
Both deeds and deeds of trust are "instruments of writing" on which recordation tax will be due unless the instrument falls into one or more exemption. Recordation tax rates vary from county to county. For current rates and a calculation chart, go to the Maryland State Recordation Tax Calculation Chart.
If a deed and purchase money deed of trust are recorded at the same time on the same property, the recordation tax will only be charged once; as long as the deed of trust does not secure an amount greater than the purchase price of the property and meets Maryland legal requirements for a purchase money deed of trust, no separate recordation tax will be charged on the deed of trust. In addition, if an instrument covers property in more than one jurisdiction, recordation taxes may be prorated between the different jurisdictions according to the portion of the property lying in each locality. An affidavit of value must accompany the recorded instrument to qualify for proration.
Special Exception: Indemnity Deeds of Trust. Indemnity deeds of trust are an important exception to the general rule that recordation taxes are due on deeds of trust. An indemnity deed of trust is a deed of trust granted by someone other than the borrower who is not primarily liable for the repayment of the loan secured by the deed of trust. Indemnity deeds of trust are not taxed at the time of recordation because they secure a contingent liability. For more information on indemnity deeds of trust, go to the indemnity deeds of trust discussion posted at this site.
Financing Statements. Recording financing statements in Maryland also can be an expensive proposition. In addition to normal filing fees for financing statements (normally $20.00 for nine pages or less and $75 for more than nine pages), the recording clerk may also require the payment of a recordation tax. Recordation taxes are owed on all financing statements except those that cover only inventory, contract rights, general intangibles, accounts or farm products or equipment used in farming operations. As a result, a financing statement that covers all assets or that cover inventory, accounts and equipment will be taxed but a financing statement that covers only accounts inventory will not.
Recordation tax rates vary from county to county. For current rates and a calculation chart, go to the Maryland State Recordation Tax Calculation Chart.
If a financing statement covers both taxable and nontaxable property, the tax can be prorated by filing a recordation tax certificate–a sworn document that sets forth the value of each type of property and recalculates the tax based on the value of the property that is covered. In addition, if taxable property is located in more than one county in Maryland or both in and outside Maryland, a recordation tax certificate can reapportion the appropriate amount of taxes that are due.
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