Agenda Item 83
Drummer, Senior Legislative Attorp..eyf/Jr:j
Glenn Orlin, Deputy Council Administrator
Expedited Bill 15-16, Recordation Tax - Rates
Expedited Bill 15-16, Recordation Tax - Rates - Allocations - Amendments, sponsored by
Lead Sponsor Council President Floreen, was introduced on April 19, 2016. A Government
Operations and Fiscal Policy Committee worksession is tentatively scheduled for May 12, at 9:30
Bill 15-16 would increase the rate ofthe recordation tax levied under state law and allocate
the revenue received from the recordation tax for different uses.
Recordation taxes are paid when a house or building is sold, or ifthe mortgage on a house
or building is refinanced. There are three elements ofthe recordation tax:
• The "base" recordation rate is $2.20/$500 on the sale price or, if refinancing, on the
additional amount borrowed over the remaining principal. (If acquiring a home, the first
$50,000 of the sale cost is exempt.) Bill 15-16 would not change the "base" rate or how
its revenue is allocated.
• The "school increment" went into effect in 2004 and its rate is $1.25/$500.
is also based
on the sale price or, if refinancing, on the additional amount borrowed over the remaining
principal. This Bill would raise the rate to $2.00/$500, effective July 1, and would generate
$125 million over the next six years. Currently the proceeds can be used for any
Montgomery County Public Schools (MCPS) capital project and for any Montgomery
College information technology capital project. The Bill would dedicate all the proceeds
to MCPS projects; College information technology projects can still be funded with general