Did You Know?

Who is eligible for a First Time Homebuyer tax exemption and what is the proper use of the First Time Homebuyer Addendum?

According to the Annotated Code of Maryland, Real Property Article §14-104(a), a  “first time Maryland home buyer” is someone who has never owned residential real property in the State of Maryland that has been the individual’s principal residence.  This means that in order to qualify as a first time Maryland home buyer and receive the tax exemption, all of the following must be true:

1.   Buyer is purchasing residentially improved real property; and

2.   Buyer is an individual who has never owned residentially improved real property in the state of Maryland that was his/her principal residence; and

3.   Buyer will reside in the property as his/her principal residence;

Each buyer who will be listed on the deed must meet criteria 1-3 to qualify for the tax exemption unless:

1. Any co-buyer(s) being listed on the deed is/are co-maker(s) or guarantor(s) of a purchase money mortgage or deed of trust; and
2. The co-buyer(s) will NOT occupy the residence as a principal residence.

A First Time Homebuyer Addendum should be included with a contract only when the buyer qualifies as a first time Maryland home buyer.  It says, in most cases, “USE ONLY IF A MARYLAND FIRST TIME HOMEBUYER”.  Do not use the form to clarify split of transfer taxes unless a first time home buyer is involved.  Paragraph 9 of the MAR Contract makes that clear.  If transfer taxes are not split, please use an addendum other than the First Time Homebuyer addendum.