State offers break on closing costs

December 26, 1993|By Staff Report

Marylanders face some of the highest closing costs in the nation, but a state law goes into effect Saturday that could help many first-time homebuyers.

The law, passed this year by the General Assembly, gives Maryland's counties and Baltimore City the right to require from buyers less in property taxes at settlement. Buyers must now pay about 14 months' worth of taxes upfront at closing; the new law would allow jurisdictions to reduce that to about 7 months' worth.

For example, the buyer of a $100,000 home in Baltimore could have his tax bite at closing reduced by about $1,300. For a cash-short buyer, this could make a significant difference -- especially in the city, which has the state's highest rate at $5.90 per $100 of assessed value. (The tax rate is applied to only 40 percent of the actual value of the home.)

Mayor Kurt L. Schmoke has already endorsed a bill -- the first of any jurisdiction in the state -- to allow first-time homebuyers to pay their taxes in two installments and reduce the amount needed at closing.

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