What Are Closing Costs and Who Pays Them in Maryland?

Maryland's closing costs run higher than a lot of buyers and sellers coming from other states expect, mostly because of one thing: transfer and recordation taxes. Here's the honest breakdown of what you'll actually pay in Anne Arundel County, and who's typically responsible for it.

The Taxes That Make Maryland Different

Every Maryland real estate transaction runs through three separate government charges:

* State transfer tax: 0.5% of the sale price, statewide.

* Anne Arundel County transfer tax: 1.0% of the sale price on transactions under $1 million, rising to 1.5% at $1 million or more.

* Recordation tax: $7.00 per $1,000 of the sale price in Anne Arundel County, applied to the deed and, separately, to the buyer's new mortgage.

On a $500,000 sale, that's roughly $2,500 in state transfer tax, $5,000 in county transfer tax, and $3,500 in recordation tax on the deed alone, before commission, title fees, or anything else. It adds up fast, and it's exactly what catches people off guard.

Who Pays What, By Custom

Maryland doesn't legally require a specific split, but there's a well-established local custom:

Sellers typically pay:

* The real estate commission

* Their negotiated share of transfer and recordation taxes, customarily split 50/50 with the buyer

* Their prorated share of the year's property taxes

* Any agreed-upon buyer concessions

Buyers typically pay:

* Loan origination, appraisal, and credit report fees

* Title search and title insurance

* Recordation tax on their new mortgage, which is almost always the buyer's responsibility

* Their negotiated share of transfer and recordation taxes on the deed

* Prepaid taxes and insurance escrows

Everything here is customary, not mandatory. What happens in your transaction is whatever you negotiate and write into the contract, and in a more balanced market, that negotiation has more room to move than it did a few years ago.

The First-Time Buyer Break

If the buyer is a qualifying first-time Maryland homebuyer, the state transfer tax drops from 0.5% to 0.25%, and by law, the seller pays the full remaining 0.25% on the seller's side. It's a meaningful savings for the right buyer, and it's worth confirming eligibility early, since it changes the math on both sides of the deal.

Rough Numbers to Plan Around

As a general range: sellers in Anne Arundel County typically see total closing costs, taxes plus commission, land somewhere around 6-8% of the sale price, all in. Buyers typically budget 2-5% of the purchase price for their side of closing, depending on loan type and negotiated concessions. These are planning numbers, not promises. Your actual costs depend on your price point, loan type, and what you negotiate in your contract.

The Bottom Line

Closing costs in Maryland are genuinely higher than in a lot of other states, almost entirely because of transfer and recordation taxes, not hidden fees or padding. Knowing the real numbers ahead of time, not just the purchase price or your expected proceeds, means no surprises at the settlement table.

If you want a real, specific estimate of what closing will actually cost on your transaction, I'm happy to walk through the numbers with you.

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Bonnie Fleishman has specialized in waterfront and move-up real estate across Anne Arundel County for 36 years, serving Pasadena, Glen Burnie, Severna Park, Arnold, Crofton, Gambrills, and Annapolis. This post is general information, not tax or legal advice. Rates and customary splits can change; confirm current figures with your title company and lender.