Incentives due 1st-time buyers

MAILBAG

July 25, 1999

Dear Mr. Azrael: Can you review what sort of first-time homebuyer's incentives related to transfer taxes (or other fees) are available in Maryland?

Are these applicable throughout the state or do they vary county by county?

How long have these incentives been available?

Kent Kester

Silver Spring

Dear Mr. Kester:

Maryland law provides closing-cost incentives for first-time Maryland homebuyers. Here is a summary of the current provisions:

* The state normally imposes a 1/2 percent tax on real estate transfers. For first-time homebuyers, the state transfer tax is reduced to 1/4 percent. Further, the law requires the 1/4 percent to be paid by the seller.

* Counties and Baltimore City also charge recordation and transfer taxes at varying rates. State law provides that when the buyer is a first-time Maryland homebuyer, the entire recordation tax and local transfer tax shall be paid by the seller unless there is an express agreement between the buyer and seller that the recordation tax and local transfer tax will not be paid by the seller.

Contracts of sale for improved residential properties are required to include a separate addendum, advising first-time Maryland homebuyers of these incentives, and specifying how the cost of local transfer tax and recordation tax is allocated between buyer and seller.

* A "first-time Maryland homebuyer" is an individual who has never owned in Maryland a residential property that has been the individual's principal residence. Buyers who have owned homes in other states may qualify.

Questions?

The Sun invites you to send real estate questions to Mailbag. Questions are answered by Jonathan A. Azrael of Azrael, Gann and Franz of Towson.

Questions -- including name, address and daytime telephone number -- may be sent in the following ways:

Mailing address: Real Estate Mailbag, Fifth Floor, 501 N. Calvert St., Baltimore, MD 21278-0001. Fax: 410-783-2517. E-mail: real.estate@baltsun.com

Call our Sundial audio-response number, 410-783-1800. Enter code 6170 after the greeting.

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