Transfer Tax

In depth

Transfer taxes (also called documentary stamps, deed taxes, or conveyance taxes) are imposed by the state, county, or city when real estate changes hands. Rates range from zero to over 4 percent, with most states between 0.1 and 1 percent. Misconception: transfer taxes are not always paid by the seller; local custom and contract terms vary. Practically, in seller-financed transactions, transfer tax applies when the deed is delivered, which may be at closing (purchase money mortgage) or at payoff (contract for deed). Some states defer transfer tax on contracts for deed until the deed actually records, which can delay tax revenue and create accrued liability. FSBO sellers should research the local transfer tax before pricing, as it directly affects net proceeds. Exemptions exist for intra-family transfers, divorces, and some refinances.