People buying and selling homes in Montgomery County would have to pay increased closing costs under legislation advanced by a County Council panel Monday.
Under the bill approved 2-1 by the Management and Fiscal Policy Committee, home-buyers and sellers would see recordation taxes increase from their current level of $6.90 per $1,000 paid for a home to $8.50 per $1,000, if theirhomes cost $600,000 or less.
Homes sold over $600,000 would be taxed at a rate of $10 per $1,000 paid.
In all cases, the first $50,000 spent on a property would be exempt.
Council Member Roger Berliner and Council President Marilyn Praisner approved the measure.
Exact figures on how much revenue the tax increase would generate were not available during the committee’s discussion of the bill, but Berliner said the recordation tax is typically far more lucrative than transportation and schools-impact taxes.
A county working group of business and public policy leaders last week recommended an increase in the recordation tax to offset the cost of funding the county’s infrastructure needs.
The median price of an existing home in the county was $510,000 in September, according to the Greater Capital Area Association of Realtors.
Under the tax increase, a homebuyer would pay a recordation tax of $3,910 instead of $3,174 on a median-priced house.
Diane Jones, Montgomery County assistant chief administrative officer, told the committee that County Executive Ike Leggett is opposed to the legislation.
“When you’re trying to get in [to the housing market] at a certain point, every little bit counts,” Jones said. “When you’re looking at paying additional money, it’s not the right message and it’s not the message the county executive wants to be sending.”
The county Planning Board also opposes the increase.
Berliner objected to Jones’ assertion, saying the revenue raised from the measure could be used to fund affordable-housing initiatives and the proposed tax increase would not hinder people’s efforts to become homeowners.
“I think there is a difference between message and real world impact and I gotta tell you I don’t think this has any real world impact on affordable housing,” Berliner said.
Panel Chairwoman Duchy Trachtenberg was the lone vote against the bill.
“I am opposed to this because I think it could quite potentially depress home ownership,” she said after referencing the region’s struggling housing market.
Real estate industry representatives have told council members that increasing the tax could make it even tougher for people to buy and sell homes: Sales of single-family homes and condos in Montgomery County fell 20 percent in 2006, according to the Realtors group.
The measure now moves to the full council for discussion today.
County officials said a final vote on the legislation is not expected until November.
