Recordation and Transfer Taxes - Exemption for Related Business Entities - Common Law Trusts
HB 82 expands Maryland’s existing exemption from recordation tax and State and county transfer tax for certain transfers between related business entities. Under current law, the exemption applies to transfers among qualifying business entities such as LLCs, corporations, limited partnerships, and statutory trusts. This bill adds common law trusts to the definition of “business entity,” and also broadens the definition of “owner” to include other persons as defined in the Corporations and Associations Article, so that more trust-related ownership structures can qualify for the exemption.
The bill applies to transfers of real property between a parent entity and a wholly owned subsidiary, between subsidiaries of the same parent, and certain transfers from a subsidiary back to its parent, so long as the statutory conditions are met. It also preserves the rule that the same transfer is exempt from county transfer tax to the same extent it is exempt from recordation tax. The bill takes effect July 1, 2026, and applies to instruments recorded on or after that date.
HB 82 amends Tax-Property §§ 12-108(p), 13-207(a)(9), and 13-405(c) to extend existing tax exemptions for intra-company real property transfers to include common law trusts. The practical effect is to reduce or eliminate recordation and transfer tax liability for qualifying property transfers involving related entities organized as common law trusts, aligning trust-based structures more closely with other business entities already covered by the exemption.
The available context shows no recorded votes or committee testimony, so there is no documented floor or hearing debate to gauge broad sentiment. Based on the bill’s narrow technical scope and its purpose of conforming the tax exemption to additional business-ownership structures, the measure appears to be a targeted administrative/tax clarification rather than a controversial policy change.
The main point of potential contention is the expansion of a tax exemption, which could reduce state and local revenue for qualifying property transfers. Any debate would likely focus on whether common law trusts should receive the same treatment as corporations, LLCs, partnerships, and statutory trusts, and whether the broadened definitions could create opportunities for tax planning or unintended eligibility. No specific opposition or support is documented in the provided materials.