Transfer tax
A tax charged by the state, county, or city when property changes hands. Sometimes paid by the seller, sometimes by the buyer, sometimes split. Rates vary widely.
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See how it worksWhere this comes up in a sale, and what follows
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Part 1 of 4
Why a seller cares
The state, county or city may tax the transfer itself, and who pays is set by custom and the contract. On a $300,000 sale it ranges from nothing to several thousand dollars, and it is on the settlement statement.
Part 2 of 4
A simple example
A $300,000 sale in a state with a 1% transfer tax split by custom. $1,500 comes off your proceeds and the buyer pays $1,500.
| Where the sale is | What the transfer tax tends to be |
|---|---|
| A state with no transfer tax | Nothing |
| A state at 0.5% paid by the seller | $1,500 on $300,000 |
| A city with its own tax on top | Sometimes several thousand more |
Transfer tax is local, and it is one of the lines that makes closing costs vary so much by state.
Part 3 of 4
What people get wrong
That the seller always pays it. Custom differs by state, and the contract can move it either way.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines transfer tax in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.