Montgomery County Council introduced a bill Tuesday to increase the tax it levies on new homebuyers. The money raised would help cover costs of school construction and renovation.
The council has delayed several school construction projects, including work at Damascus High School, due to a lack of funding. “The proposal to raise rates is about our schools,” explained Councilmember Kristin Mink.
The recordation tax is a one-time tax for homebuyers. If approved in its current form, homebuyers purchasing a $500,000 home would pay an additional $1,100, according to Mink, who along with Councilmember Will Jawando, proposed the increase.
If approved, the increase would bring in more than $200 million over the next five years, Mink said.
“There is a large gap” between what is needed for the schools and how much revenue the county has, Mink said, noting these are “urgently needed projects.” Every year that a project is delayed, its costs go up, she added.
Jawando said the increase “would not solve all our problems but it will certainly help,” adding, “I think this is the time to do it” as the county has “a record deficit” in money dedicated to school construction.
He called the increase “a progressive tax,” noting that the more expensive a home is, the greater the tax collected would be. “It’s a lower fee depending on the size of the house.”
The base recordation rate is $2,08 for each $500 on the sale price. This would not change under the proposal.
The part dedicated to schools, which went into effect in 2004, is proposed to increase from $2.37 to $3.79 for each $500 that the home costs. That is about a 62% increase.
The bill also adds a new premium of $1.15 for each $500 of a home valued at more than $1 million. Those funds would be allocated to the Montgomery Housing Initiative. Half of those funds would go to county government capital projects. The other half would be designated for rental assistance for low- and moderate-income households.
A public hearing on the proposal is set for April 11 at 1:30 p.m. If approved, the increase would go into effect next summer.
This is not the only proposed tax increase county residents may have to fork over. County Executive Marc Elrich has called for a 10-cent property tax increase in next fiscal year’s operating budget. The $6.8 billion budget is an increase of 7.7 %.
The current median property tax is $3,690 per year for a home worth the median value of $482,900.
His proposal needs the consent of the council before going into effect.
