{"id":633,"date":"2019-03-29T09:42:04","date_gmt":"2019-03-29T13:42:04","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=633"},"modified":"2024-04-25T23:21:06","modified_gmt":"2024-04-26T03:21:06","slug":"real-estate-transfer-taxes","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/real-estate-transfer-taxes\/","title":{"rendered":"Real Estate Transfer Taxes"},"content":{"rendered":"\n
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Most states\nand the District of Columbia impose a deed\ntransfer tax<\/em> when real property changes hands. This sales tax\nis based on the value of a given property. It applies to a transfer of full ownership\nfrom seller to buyer. It is also applied to any percentage of the property that\nis conveyed short of the entire property. Thus, if one co-owner relinquishes\njoint ownership in the entire property, the tax is calculated on half of the\nvalue.<\/p>\n\n\n\n\n\n\n\n

A\nDeed Transfer Tax, By Any Other Name<\/h2>\n\n\n\n

Also called\nthe real estate transfer tax<\/em>,\nthe deed transfer tax is distinct from property taxes. When\nthe county collects the transfer tax for the state, a stamp goes on\nthe deed. Thus, the tax is a form of stamp\ntax.<\/em> Florida and Pennsylvania use the term documentary stamp tax<\/em>.<\/p>\n\n\n\n

Ohio calls\nit a real property\nconveyance fee;<\/em> Rhode Island calls it a real estate conveyance tax. <\/em>A\nfew states use the term deed\nrecording fee.<\/em> Washington State uses the term real estate excise tax.<\/em><\/p>\n\n\n\n

Deed\ntransfer taxes can also include taxes imposed by the county or city.<\/p>\n\n\n\n

How\nMuch Is the Tax?<\/h2>\n\n\n\n

It depends.<\/p>\n\n\n\n

Across the United States, the higher end of the total transfer tax can amount to more than 4.5%, taking the example of Allegheny County, PA<\/a> (home of Pittsburgh). In the city of Philadelphia<\/a> you\u2019ll also pay more than 4%: 3.278% to the city\u00a0plus 1% to Pennsylvania.<\/p>\n\n\n\n

Delaware\u2019s\ntransfer tax at the time of this writing is 2.5% of the property\u2019s sale price\nplus a county transfer tax of up to 1.5% – a total of 4%. (If the Delaware\ncounty imposes no transfer tax, the state can then impose a tax as high as 3%\nof the property value.) The buyer and seller split the tax. The seller\npays 1.25%. A first-time buyer pays only .75%, not 1.25%, if the home\ncosts $400,000 or less. <\/p>\n\n\n\n

Florida\ndocumentary stamp taxes use a calculation process. To make it simple, imagine a\ncondo in Lee County that sells for $100,000. Divide the sales price by 100,\nthen multiply by .70. That\u2019s 1000 x .70 = $700 for the documentary tax stamp.\nIn Miami-Dade County only, use 1000 x .60.<\/p>\n\n\n\n

The New York State transfer tax rate is $2 per\u00a0$500 of the home price, plus a 1% \u201cmansion tax\u201d for homes selling at $1 million and higher. Some counties\u00a0levy more. In New York City, transfer taxes can amount to 2.625%\u00a0of a property’s value. Look for mortgage recording taxes, too, in New York City. New York has many local optional taxes that vary by county.<\/p>\n\n\n\n

Who\nPays the Tax?<\/h2>\n\n\n\n

The deed\ntransfer tax is a closing expense – traditionally the seller\u2019s responsibility. Often,\nthough, the buyer agrees to contribute. In Washington, DC, the law requires the\nbuyer and seller to split the deed transfer tax.<\/p>\n\n\n\n

Where the\nparties may negotiate their portions, their agreement should appear in the\nhome sale\u2019s contract terms.<\/p>\n\n\n\n

The Internal\nRevenue Service does not consider deed transfer taxes deductible. The buyer\nshould add any transfer tax paid to the cost basis of the asset, to offset\ncapital gains when selling later.<\/p>\n\n\n\n

Who\nDoes Not Pay the Tax?<\/h2>\n\n\n\n

Several\nstates exempt first-time home buyers from a percentage of the total deed\ntransfer tax. For example, a first-time\nhomebuyer<\/a>\nin Maryland need not pay, although the seller must pay .25%. Each state has its\nown provisions.<\/p>\n\n\n\n

Transfers\namong household members may be exempt, including:<\/p>\n\n\n\n