Rental Property Taxes in Maryland (2026 Guide)

1. Income Tax: State Plus County

Maryland's income tax is graduated 2% to 6.5%, starting from federal AGI. The 2025 Budget Reconciliation Act (HB352) added two new top tiers: 6.25% over $500k single / $600k joint and 6.5% over $1M / $1.2M; the broad middle rate is 4.75%.

2. The New 2% Capital-Gains Surtax

Maryland has no preferential capital-gains rate — gains are taxed as ordinary income — and HB352 added a 2% surtax on net capital gains when federal AGI exceeds $350,000 (tax years 2025–2028). A large rental-property sale gain that pushes you over $350k FAGI generally gets hit: rental real estate is not §179-eligible and is not a primary residence, so it falls outside the surtax exemptions.

3. Property Tax in Maryland

Maryland assesses property at full market value (SDAT), reassessed on a triennial cycle, with a statewide effective rate around 1% — a small state component (about $0.112 per $100) plus a dominant county levy.

• The Homestead Tax Credit excludes rentals — its cap on annual assessment increases applies only to an owner-occupied principal residence.
• Homeowners' and Renters' tax credits are owner-occupant/tenant relief, not available to a landlord on a rental unit.

4. The Transfer & Recordation Stack

Maryland layers several charges on a sale rather than one transfer tax — figure roughly 1.5% or more of price all-in:

• State transfer tax — 0.5% of consideration (Tax-Property §13-203); the first-time-buyer cut to 0.25% is owner-occupant only.
• County transfer tax — varies, up to about 1.5% in some counties.
• Recordation tax — a per-$500 charge set by each county (§12-103).
• High-tax jurisdictions — Baltimore City stacks to roughly 3% (with a yield-tax surcharge on $1M+ deeds); Montgomery County runs higher on larger sales.

5. LLC Fees & Personal-Property Return

A Maryland LLC files SDAT's $300 annual report (Form 1), due April 15, regardless of activity. Form 1 doubles as the business personal-property return — if the LLC owns or uses Maryland personal property, that return is part of it (under $20,000 you can simply certify the fact).

6. Rent Control (Local — and Growing)

Unlike most states, Maryland has no statewide preemption, so localities may enact rent control — and several have. Check the jurisdiction before you buy:

• Montgomery County — rent stabilization (Bill 15-23): the lesser of CPI + 3% or 6%; the current allowance is about 5.7%. Buildings from 2002 or earlier; new construction exempt for 23 years.
• Takoma Park — long-standing rent stabilization tied to CPI; one increase per year.
• Prince George's County — the permanent Rent Stabilization Act of 2024 (CB-055-2024): the lesser of CPI + 3% or 6% (senior housing lower); units built after Jan 1, 2000 exempt.

7. Security Deposit Rules

Maryland tightened its deposit law in 2024 (Real Property §8-203):

• Cap cut to 1 month's rent by HB693, effective October 1, 2024 (leases signed before then keep the old 2-month cap).
• Interest required — simple interest at the greater of the 1-year Treasury rate or 1.5%/year, once the deposit is held at least six months.
• Return within 45 days of the tenancy ending, with a written itemized statement of any deductions.

8. How SheltrIQ Helps Maryland Landlords

Maryland's stacked rates make accurate projection essential — SheltrIQ models the full picture:

• State + local income modeling — combines the graduated state rate with your county tax so the projected number is real, not just the 6.5% headline.
• Disposition modeling — flags the 2% capital-gains surtax when a sale pushes FAGI over $350k.
• AI Schedule E classification — sorts each expense to the right line so your MD income starts from an accurate federal return.
• Deadline reminders — keeps the $300 April 15 annual report and estimated-payment dates on your radar.