Negotiating the world of taxes
Whether you’re buying or selling your home in Virginia, DC, or Maryland, you’re likely going to run into negotiations that involve who pays which tax. The District seems to have made it easiest with a solid 1.45% tax on both sides of the table if the transaction is more than $400,000 or 1.1% on each side if it is less than that amount. Northern Virginia has a .33% tax on the buyers’ side for each the deed and deed(s) of trust and a .25% tax on the sellers’ side. They’re laid out pretty evenly and pretty clearly.
When it comes to Maryland, however, it is in a league of its own. After the state transfer and recordation taxes, each county has its own transfer and recordation tax rates. Many of these counties also offer exemptions for owner-occupied properties and primary residence properties. Maryland also has the First Time Homebuyer Exemption and an exemption from state recordation for the first $50,000 if the buyer intends to live in the home for 7 of the next 12 months. Often times the title company will escrow property taxes as well. Because the current owner of the home pays real estate taxes a year in advance, depending on the time you get to closing, those taxes may have already been paid for the upcoming year, and the current owner has the right to have that money returned, in which case the buyer will be subject to pay them. Oftentimes when you’re talking about buying and selling real estate in the metro area, transactions happen across state lines. The legal jargon is enough to give anyone a headache.
Frequently in a buyers’ market you’ll hear the term “seller pays closing costs,” or vice versa in a sellers’ market. Truthfully, there are specific taxes that are slotted for either the buyer or the seller to pay, meaning they aren’t transferable to the other side of table. Hagan Realty’s agents are trained on the laws that regulate these taxes and how to handle their negotiation. There are certain buyer and seller credits that are permitted to equal the exact amount of the taxes that party owes. Sometimes the lender will give credits, other times they are written into the asking price of the home. Knowing how to handle this small part of contract negotiations can save you thousands of dollars.
Because you have better things to worry about than becoming a real estate tax expert, let our experts handle it for you. We’ll negotiate the best price on your transaction whether you’re the buyer or seller. We take all things into consideration – even those pesky taxes.