Agenda Item 5E
April 4, 2017
Introduction
MEMORANDUM
March 31, 2017
TO:
FROM:
SUBJECT:
County Council
Robert H. Drummer, Senior Legislative Attorney
~
Introduction:
Bill 10-17, Recordation Tax - Rates
~
Amendments
Bill 10-17, Recordation Tax - Rates
~
Amendments, sponsored by Councilmember EIrich, is
scheduled to be introduced on April 4. A public hearing is tentatively scheduled for April 25 at 1:30 p.m.
Bill 10-17 would modify the recordation tax rates levied under state law for certain transactions.
Background
The "Recordation Tax Premium" went into effect in 2008. Bill 15-16, enacted on May 18,2016,
increased the Premium rate from $1.55 to
$2.301$500.
Unlike the two elements of the base rate paid on
all transactions, the Premium applies only to the cost of a property or a refinancing that is more than
$500,000. Half of the proceeds from the Premium are allocated to County Government capital projects
(i.e., capital projects of departments in the Executive Branch); the other half is for rent assistance for low
and moderate income households.
Bill 10-17 would reduce the Premium for transactions that are more than $500,000 but less than
$1,000,000 from 2.30 to
$1.55/$500.
The Bill would increase the Premium for transactions that are more
than $1,000,000 but less than $2,000,000 from $2.30 to
$2.55/$500.
The Bill would also increase the
Premium for transactions that are more than $2,000,000 from $2.30 to
$3.55/$500.
This packet contains:
BilllO-17
Legislative Request Report
Circle #
1
4
F:\LAWlBILLS\l71 0 Recordation Tax Rates - Amendments\Intro Memo.Docx
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Bill No. _ _ _ _ _
----!1~0-...!.1_'_7
_ __
Concerning: Recordation Tax - Rates ­
Amendments
Revised:
3/31/2017
Draft No. =2_ __
Introduced:
April 4, 2017
Expires:
October 4, 2018
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: --=-:.No=n.:..::e=--_ _ _ _ __
Ch.
~,
Laws of Mont. Co.
[year]
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember EIrich
AN
ACT to:
(1)
(2)
modify the recordation
tax
rates levied under state law for certain transactions; and
generally amend the law governing the recordation
tax
By amending
Montgomery County Code
Chapter 52, Taxation
Section 52-l6B
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No.
10-17
1
Sec.
1.
Section 52-16B is amended as follows:
52-16B. Recordation Tax.
(a)
2
3
4
Rates.
The rates and the allocations of the recordation tax, levied under
Md. Tax-Property Code §§12-101 to 12-118, as amended, are:
(1)
for each $500 or fraction of $500 of consideration payable or of
the principal amount of the debt secured for an instrument of
writing, including the amount of any mortgage or deed of trust
assumed by a grantee;
(A) $2.08, of which the net revenue must be reserved for and
allocated to the County general fund; and
(B) $2.37, of which the net revenue must be reserved for and
allocated to the cost ofcapital improvements to schools; and
(2)
if the consideration payable or principal amount of debt secured
exceeds $500,000[,t
(A)
an additional [$2.30] $1.55 for each $500 or fraction of$500
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7
8
9
10
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15
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of the amount over $500,000 but less than
$1,000,000[,]~
(ill
an additional $2.55 for each $500 or fraction of$500 of the
amount over $1,000,000 but less than $2,000,000; and
(g
an additional $3.55 for each $500 or fraction of$500 ofthe
amount over $2,000,000.
21
ill
The net revenue from the premiums payable under paragraph
ill
[of which the net revenue] must be reserved for and allocated
equally to:
(A) the cost of County government capital improvements; and
(B) rent assistance for low and moderate income households,
which must not be used to supplant any otherwise available
funds.
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25
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27
Q
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f:\Iaw\bills\1710 recordation
tax
rates - amendments\biIl2.doc.x
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BILL
No.1 0-17
28
29
(b)
Exemption.
The fIrst $100,000 of the consideration payable on the
conveyance of any owner-occupied residential property is exempt from
the recordation
tax
if the buyer of that property is an individual and
intends to use the property as the buyer's principal residence by actually
occupying the residence for at least 7 months of the 12-month period
immediately after the property is conveyed.
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Sec. 2. Effective Date.
This Act must apply to any transaction which occurs on or after September 1,
2017.
Approved:
37
38
Roger Berliner, President, County Council
Date
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Approved:
40
Isiah Leggett, County Executive
Date
41
This is a correct copy o/Council action.
42
Linda M. Lauer, Clerk of the Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 10-17
Recordation Tax
-
Rates
-
Amendments
DESCRIPTION:
Bill 10-17 would modify the recordation
tax
rates levied under state
law for transactions that are more than $500,000.
The premium rate for transactions that are more than $500,000 but
less than $1,000,000 is high. The revenue loss from lowering this
premium rate can be made up by increasing the premium rate for
transactions that are more than $1,000,000.
The goal is to lower the premium rate for transactions that are less
than $1,000,000.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
Office of Management and Budget, Finance
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
To be determined.
N/A
N/A
SOURCE OF
INFORMATION:
Robert H. Drummer, Senior Legislative Attorney
APPLICATION
WITHIN
MUNICIPALITIES:
applicable
PENAL TIES:
NI
A
F:\LAW\BILLS\1710 Recordation Tax Rates - Amendments\LRR.Docx