SDAT Agricultural Transfer Tax
Background
The preservation of agricultural land is extremely important to all citizens of Maryland. Years ago, the
Maryland General Assembly declared that it is in the general public interest of the State to foster and
encourage farming activities to maintain a readily available source of food and dairy products, to encourage
the preservation of open space as an amenity necessary for human welfare and happiness, and to prevent
the forced conversion of open space land to more intensive uses. In fact, Maryland was the first State in the
nation to formally adopt a policy providing for lower assessments (and property taxes) on land that is
actively devoted to farm or woodland uses. The "agricultural use assessment" is granted to farm land or
woodland that meets the criteria outlined in State Law. This special assessment means that the land is
appraised according to its current use and not according to its actual market value which, in many
instances, is significantly higher. The result is that the owner of land receiving the lower "agricultural use
assessment" pays less property taxes and there is less pressure to convert the land to more intensive uses.
Another method used to preserve agricultural land is the State's Agricultural Land Preservation Program.
This program, administered by the Maryland Department of Agriculture, purchases development rights on
existing farms thereby ensuring that they will remain as active farms. A key funding source for this program
is the Agricultural Transfer Tax, which is a tax imposed on the sale of land removed from receiving the
agricultural use assessment. The agricultural use assessment, the agricultural transfer tax, and Maryland’s
Agricultural Land Preservation Program work together to preserve farmland and woodland in Maryland.
The agricultural transfer tax serves several roles; as a deterrent in the conversion of the land for
development; as a penalty when land has been removed and transferred from this preferential use
assessment; and finally, in funding the purchase of easements on farmland to protect lands from future
development.
When the Agricultural Transfer Tax & Surcharge Applies
The Agricultural Transfer Tax and Surcharge applies at the point of sale on land that receives the
agricultural use assessment; or in some cases, where land that had previously received the agricultural use
assessment. The Department’s website identifies property accounts subject to an Agricultural Transfer Tax
on its Real Property Data Search
site. Property accounts subject to an Agricultural Transfer Tax will have a
Special Tax Recapture area noted as “Agricultural Transfer Tax”. This notation is clearly identified in a red
bold format both at the top and bottom of the website’s property screen so that it is not overlooked.
Technically, the Agricultural Transfer Tax is imposed on the written instrument (deed) conveying title to the
property and it must be paid before the document can be recorded in the land records of the county. When
the amount of Agricultural Transfer Tax is requested by a customer, the local assessment office prepares an
Agricultural Transfer Tax Statement
that contains the details of the tax and surcharge calculation. The
Agricultural Transfer Tax Statement provides the total amount that will be due upon transfer. The tax is
collected by the local County Finance or Treasurer’s Office. State Law (Sections §13-301 through §13-308
of the Tax-Property Article) provides the statutory framework for the Agricultural Transfer Tax and
Surcharge. Generally, the law specifies that the tax is due on all transfers of agricultural land unless exempt
or the purchaser is willing to sign a Declaration of Intent. (Refer to those sections below for more details)
It is important to note that there are a few counties that also impose a County Agricultural Transfer Tax in
addition to the State of Maryland’s tax. Please contact the Finance or Treasurer’s Office for the county in
which the property is located within to determine if any additional local tax is applied.
Revised 7/25/2019