Maryland Taxes the New Money, Not the Old
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
In most states, reaching your own equity is free. Maryland treats the increase in your debt as a taxable event, and that changes which structure is cheapest.
The rule
Md. Tax-Property 12-108(e) reads: a supplemental instrument of writing is not subject to recordation tax except to the extent that (1) actual consideration is payable on the supplemental instrument of writing; or (2) the amount of unpaid outstanding principal debt is increased by the supplemental instrument of writing.
The structure of that sentence is the whole point. The default is no tax. The exception is an increase in principal. Recording a lien that leaves your debt where it was costs nothing; recording one that raises it is taxed on the difference.
The refinancing exemption, and what it does not reach
Section 12-108(g) is the provision most people have heard of. It exempts a mortgage or deed of trust from recordation tax to the extent of the amount of unpaid outstanding principal of the original mortgage, indemnity mortgage or deed of trust that is being refinanced.
Two limits sit inside that. The first is the amount: the shelter stops at the unpaid principal balance being replaced. The second is the borrower: the statute requires that the property be refinanced by the original mortgagor, or by the original mortgagor and, if applicable, that mortgagor's spouse, or by the settlor of an inter vivos trust where the mortgage is given by a trustee of the trust.
Put together: a rate-and-term refinance of your own loan is sheltered. A cash-out refinance is sheltered only up to the old balance. A brand new second mortgage or equity line is an increase in principal from the first dollar.
What that means for a move-up
Three structures fund a Maryland purchase before the current home sells, and they do not carry the same state tax.
| Structure | New lien recorded? | Recordation tax exposure |
|---|---|---|
| Carry both payments, recast after the sale | Only the new purchase money | None on the departing home |
| Cash-out refinance of the departing home | Yes | Sheltered to the old balance; taxed on the increase |
| New second mortgage or equity line | Yes | Taxed on the full new principal |
| Keep it and rent it | No | None on the departing home |
That is a genuine reason Maryland move-ups lean toward carrying both payments more often than movers in states with no recording tax. It is not the only factor, but it is a real number and it belongs in the comparison rather than being discovered at settlement. See the structures page.
The transfer tax is a separate thing
Do not confuse the two. Recordation tax attaches to recording an instrument that secures debt. Transfer tax attaches to the transfer of the property itself. Md. Tax-Property 13-203(a)(1) sets the state transfer tax at 0.5% of the consideration payable for the instrument of writing, and consideration includes the amount of any mortgage or deed of trust assumed by the grantee.
Counties levy their own transfer taxes on top of the state rate, which is again a local figure.
And first-time-buyer relief will not reach a mover
Section 13-203(b)(1) defines a first-time Maryland home buyer as an individual who has never owned residential real property in the State that has been the individual's principal residence. Under (b)(2), where there are two or more grantees the subsection does not apply unless each grantee is a first-time Maryland home buyer or a co-maker or guarantor of a purchase money mortgage under 12-108(i).
If you already own a Maryland principal residence, that door is closed to you. Worth knowing because it is frequently cited in general Maryland homebuying advice written for a different audience.
On rates
Recordation tax is imposed at rates set by each county and by Baltimore City, and they differ meaningfully across the state. We do not publish a rate here because the right one depends on where your departing home sits, and a stale number is worse than none. Your county finance office or your title company will give you the current figure for your jurisdiction.
For the other half of the Maryland picture, see the homestead reset page, and for the whole plan the Maryland guide.
Frequently asked questions
Does Maryland charge recordation tax on a home equity line?
Yes, to the extent it increases your principal debt. Md. Tax-Property 12-108(e) subjects a supplemental instrument of writing to recordation tax to the extent that actual consideration is payable on it or the amount of unpaid outstanding principal debt is increased by it. A new equity line is an increase from the first dollar.
Is a Maryland refinance exempt from recordation tax?
Up to the old balance. Md. Tax-Property 12-108(g) exempts a refinancing to the extent of the amount of unpaid outstanding principal of the original mortgage or deed of trust being refinanced. Anything above that balance is taxable, and the exemption requires the refinancing to be by the original mortgagor, that mortgagor and spouse, or the settlor of an inter vivos trust through its trustee.
Which buy-before-you-sell structure avoids Maryland recordation tax on the old home?
Carrying both payments and recasting after the sale, or keeping the departing home as a rental. Neither records a new lien against the departing property, so neither increases its principal debt. Borrowing against that equity does, and is taxed on the increase.
What is the difference between Maryland recordation tax and transfer tax?
Recordation tax attaches to recording an instrument that secures debt, and under 12-108(e) it applies to the extent principal is increased. Transfer tax attaches to the transfer of the property itself, at a state rate of 0.5% of consideration under 13-203(a)(1), with counties levying their own on top.
What are Maryland's recordation tax rates?
They are set by each county and by Baltimore City rather than statewide, and they differ meaningfully. Ask your county finance office or your title company for the current rate in the jurisdiction where the property sits.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Maryland recordation tax rates are set by each county and Baltimore City, and the Homestead Tax Credit is administered by the State Department of Assessments and Taxation; your county finance office, your CPA or a Maryland attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.