The County Council is considering a bill to adjust the County’s recordation tax premium that would increase the tax for more expensive homes and lower it for cheaper ones.
Council bill 10-17 would raise the recordation tax premium for homes sold at $1 million or more from $2.30 for every $500 of a home’s sale price to $2.55 per $500, and lower it if for homes sold at between $500,000 and $1 million from $2.30 per $500 $1.55 per $500.
On June 22, during a work session on the bill, the Council Government Operations Committee members decided to postpone its recommendation to the full council on whether to accept the bill until the committee acquires data on the average amount buyers and sellers pay for the recordation tax premium.
“I don’t believe in flat Earth and I don’t believe in flat taxes,” Council member Marc Elrich (D-at large) said. “And I thought it should be more progressive.”
Elrich, the bill’s lead sponsor, said he designed the bill to be revenue-neutral. However, the County Department of Finance determined that as currently constructed the County would receive an additional $9,700,000 in revenue.
Last year the Council unanimously voted to increase all three versions of the recordation tax saying the County needed extra revenue to fund school construction. While half of the revenue from the recordation tax and all of the revenue from the school increment tax must be earmarked for schools, the recordation tax premium is ear marked for rent assistance and capital projects. The County would use money from the recordation tax premium for the County’s capital projects such as parks and infrastructure, but the county recently used some of it to pay for the County’s lawsuit against the builders and designers of the Silver Spring Transit Center, which cost about $12 million for litigation.
“We increased the recordation tax in order to take care of the school system, but the recordation tax always had a piece that went for County projects and so this was used for that purpose too,” said Council President Roger Berliner (D-1).
Additionally the increase in recordation tax has bothered real estate agents and property owners who suggested the increase in the recordation tax premium for properties sold at more than $1 million is unfair.
“The proposal will unfairly impose a second, significant increase to the recordation tax rate on AOBA members and other businesses that already bear a disproportionate share of the County’s tax burden,” said Nicola Y. Whiteman, a spokesperson for the Apartment and Office Building Association of Metropolitan Washington.