Advocates for affordable housing in Montgomery County won minor victories Tuesday in the ongoing tug of war between the jurisdiction’s need for reasonably priced homes and efforts to control growth.
Montgomery County Council members agreed to ditch a plan to increase closing costs for all people buying and selling homes in the county in favor of a proposal that would increase the recordation tax only on homes that cost more than $500,000. The recordation tax is paid by buyers and sellers when they close a real estate deal and has historically been one of the largest generators of revenue in the county.
The recordation tax is $6.90 per $1,000 of sales price, with the first $50,000 exempt. The amount of the tax increase for homes over $500,000 in the new proposal, suggested by Council Member Duchy Trachtenberg, has not been decided. However, Trachtenberg says it would be a progressive tax structure in which the most expensive homes would be charged $10 per $1,000 in sale price.
Trachtenberg sought to devote all revenue generated by the tax increase to rental assistance programs for low- and moderate-income households, but after discussion with other council members agreed to split the money between county infrastructure funds and rental assistance programs.
Council staff estimate the recordation-tax increase would generate about $10 million in new funds.
“More and more, there is a disappearance of affordable rental units right here in Montgomery County,” Trachtenberg said. “It doesn’t sound like a lot of money, but $5 million is $5 million, and that could subsidize a lot of people’s rent who could perhaps find themselves in desperate circumstances.”
The council also tentatively approved raising the schools-impact tax developers must pay on single-family, detached houses from $9,111 to $20,456, from $4,555 to $9,734 for condos and from $1,822 to $4,127 for high-rise apartments.
