Renting Out Your Maryland Home Instead of Selling It
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
In Maryland this route has a genuine cost advantage the equity route does not, because it records nothing. What it costs instead is the homestead credit on that property.
What it avoids
Every Maryland structure that records a new lien against the departing home runs into Md. Tax-Property 12-108(e), which subjects a supplemental instrument of writing to recordation tax to the extent the amount of unpaid outstanding principal debt is increased by it.
Converting the departing home to a rental records nothing. No new instrument, no increase in principal, no recordation tax on that property. In a state that taxes borrowing, that is a real point in this structure's favour, and it is one reason the rental route gets chosen more often in Maryland than the national pattern would suggest. See the recordation tax page.
What it costs
The Homestead Tax Credit on that property. Md. Tax-Property 9-105(a)(5)(i)(1) defines a qualifying dwelling as a house used as the principal residence of the homeowner and actually occupied, or expected to be actually occupied, by the homeowner for more than 6 months of a 12-month period beginning with the date of finality for the taxable year.
A departing home with a tenant in it is not the homeowner's principal residence and will not be occupied by the homeowner for more than six months. It fails the definition, and the assessment cap on that property goes with it.
Note the shape of this compared with other states. Utah preserves its exemption for a tenant's primary residence; Idaho requires owner-occupancy and forfeits it. Maryland's mechanism is neither: it is an assessment cap tied to the homeowner's own occupancy, which a rental cannot satisfy, and which in any case resets on your purchase of the new home. See the homestead reset page.
The lease will not help your loan
Fannie Mae Selling Guide B3-3.8-05, dated 09/02/2026 under Announcement SEL-2026-08, ends its documentation section with a flat statement: lease agreements are not permitted for any departing residence.
Acceptable evidence of monthly gross rent is a complete appraisal report that includes market rents; a Single-Family Comparable Rent Schedule, Form 1007, for the occupied unit; or market analysis tools such as Zillow, Redfin or the MLS using at least three comparable rental properties from the same market area, including subdivision or project where possible. The lender must also document a current housing payment before any of that rental income is usable.
What the income is worth
Adjusted net rental income is monthly gross rent times 75%, then minus the departing residence's PITIA. Positive, and it offsets that property's PITIA and stops there. Negative, and the shortfall is added to your debt-to-income ratio. The best available outcome is that the old house stops counting against you.
Build the PITIA carefully. The departing home's tax line will reflect the loss of its homestead credit, so use the uncapped figure rather than the current bill.
Reserves and the 12-month line
B3-3.8-05 requires six months of reserves covering the vacated property's PITIA when the borrower has less than 12 months of property management experience, in addition to reserves required for multiple financed properties.
If the departing home has more than one unit
The lender obtains the most recent year of individual federal income tax returns, IRS Form 1040, to support rental income received for tenant-occupied units. Those units follow the non-subject-property guidance, and the vacancy factor applies only to the unit the borrower occupied.
Compare the routes on the structures page, or start from the Maryland guide.
Frequently asked questions
Does renting out my Maryland home trigger recordation tax?
No. Recordation tax under Md. Tax-Property 12-108(e) attaches to recording an instrument that increases unpaid outstanding principal debt. Converting the departing home to a rental records no new instrument against it, so no recordation tax arises on that property.
Will renting my Maryland home cost me the Homestead Tax Credit?
Yes, on that property. Md. Tax-Property 9-105(a)(5)(i)(1) requires the dwelling to be the homeowner's principal residence, actually occupied or expected to be occupied by the homeowner for more than 6 months of the relevant 12-month period. A tenanted home does not meet that.
Can I use a signed lease to document rent on the Maryland home I am leaving?
No. Fannie Mae Selling Guide B3-3.8-05, dated 09/02/2026, states that lease agreements are not permitted for any departing residence. Use a complete appraisal including market rents, a Form 1007 rent schedule, or market analysis tools with at least three comparable rentals.
How is rental income from a departing residence calculated?
Monthly gross rent times 75% for net rental income, then minus the departing residence's PITIA. A positive result may offset that property's PITIA only. A negative result must be included in the debt-to-income ratio.
How many months of reserves will a first-time landlord need in Maryland?
Six months of reserves covering the vacated property's PITIA, because that requirement applies when the borrower has less than 12 months of property management experience. It is in addition to any reserves required for multiple financed properties.
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.