Prince George’s County may be the single most complex county in the nation when it comes to mortgage recordation and transfer taxes. Although far from a complete guide on Prince George’s County’s various exemptions, discounts, and oddball calculations, this article will shed some light on the numerous complexities Prince George’s County brings to the LE.
A Variety of Different Taxes
First and foremost, Prince George’s County boasts probably the highest number of different taxes due at the time of property transfer and securitization.
There are both state and county transfer taxes, as well as a state deed recordation tax. All of these taxes are typically split 50/50 between the buyer and seller.
Additionally, there are state mortgage recordation and county mortgage taxes due, for which the buyer is responsible. In total, that amounts to five different taxes payable at the time of property transfer!
Discounts and Exemptions
Although there are a variety of taxes due when transferring and securing real property, Prince George’s County offers numerous discounts and exemptions from these taxes. If the purchaser is a qualified first-time homebuyer and the property will be a principal residence, for example, there is an exemption from the state transfer tax.
Additionally, the state mortgage recordation tax can be discounted in several ways.
For refinance transactions, if the property is a principal residence, the borrowers are the same as the previous mortgage, and the book and page of the prior mortgage is included with the recording (or if the original purchase money mortgage has been on record for more than 12 months) then the state mortgage recordation tax is due only on the new money. The new money is the new loan amount less the unpaid debt on the property being refinanced.
Borrowers Added to or Removed from the Deed
If the borrowers are not all the same, in the case of a person being added or removed from the deed, then the state mortgage recordation tax is discounted based upon the percentage of borrowers that do remain the same.
For example, if there were two parties on the deed and one is being removed, then the discount for the tax due will be applied at 50%. If there were three parties on the deed and two are being removed, then 33% of the state mortgage recordation tax will be discounted, since one out of three parties remain the same as the original mortgage.
For purchase transactions, if the purchase money mortgage is being recorded at the same time as the deed, then the state mortgage recordation tax and county mortgage tax are based on the difference between the loan amount and the purchase price. If the purchase price is greater than the loan amount, this will result in no state mortgage recordation or county mortgage taxes being due when completing the transaction.
More Discounts and Exemptions
There are other exemptions and discounts from the county mortgage taxes as well. If the property is a non-principal residence, but the book and page of the prior mortgage is included with the recording and the borrower is the same as on the original debt, or the debt was assumed from the original mortgagor, then the county mortgage tax payable is based upon the difference between the loan amount and the original debt amount.
The same is true if the property is a principal residence, there is unpaid debt on the property, the book and page of prior mortgage is included in the recording, and the borrowers are all the same as on the previous debt. The county mortgage tax is exempt entirely if the property is a principal residence, there is unpaid debt attached to the property, the book and page of prior mortgage is included with recording, the borrowers are the same as on the previous debt, and the transaction is refinancing a purchase money mortgage which has been on record for more than 12 months.
We hope this guide helps you navigate some of the quirks inherent to Prince George's County, Maryland. If you have any questions, please don't hesitate to reach out. You know where to find us!
For reference, all of these exemptions, discounts, and calculation quirks can be worked out by using the Prince George’s County Finance Affidavit attached on the following page.
Or, to make it easier, one could rely on LodeStar’s Closing Cost Calculator to remove all the guesswork and stress from transactions in this complicated county...