Definition: What Is Real Estate Transfer Tax?
A real estate transfer tax (also called a deed transfer tax, documentary stamp tax, or conveyance tax) is a state, county, or city tax charged when ownership of real property changes hands. It is assessed as a percentage of the sale price and is one of the closing costs you will see on your Closing Disclosure (CD).
The tax is triggered by the recording of a deed — the legal document that transfers ownership from the seller to the buyer. When the title company or escrow officer submits the deed to the county recorder, they also remit the transfer tax to the appropriate government authority.
How Is Real Estate Transfer Tax Calculated?
The formula is straightforward:
Example: $500,000 home in Florida (0.70% rate) = $3,500
Some states use a per-dollar or per-$500 format instead of a clean percentage:
- California: $1.10 per $1,000 = 0.11%
- Alabama: $0.50 per $500 = 0.10%
- Florida: $0.70 per $100 = 0.70%
- New Hampshire: $15.00 per $1,000 = 1.50% (split equally)
Many states have graduated rates that increase above certain price thresholds — most notably New York, Washington D.C., and Connecticut.
Who Pays Real Estate Transfer Tax?
The answer varies by state and is always negotiable in the purchase contract. Here are the common defaults:
| Who Pays | States (default) |
|---|---|
| Seller | California, Florida, Georgia, Michigan, New York (state portion), most others |
| Split equally | Delaware, Maine, Maryland, New Hampshire, Washington D.C. |
| Buyer | Mansion tax portion in NY and NJ (above $1M); buyer pays in some PA counties |
| Negotiable | Pennsylvania, Connecticut — custom splits are common |
Even where one party "customarily" pays, the purchase contract can specify a different arrangement. In a buyer's market, sellers may agree to cover both sides.
States with No Real Estate Transfer Tax
Thirteen states impose no transfer tax at the state level:
Note: some of these states still charge county recording fees or have limited local transfer taxes (e.g., Oregon cities).
Common Exemptions
Many states carve out exemptions for specific situations. Common examples include:
- Family transfers: transfers between spouses, parents/children, or siblings
- Divorce: property transferred per a divorce settlement is usually exempt
- First-time homebuyers: Maryland, Washington D.C., and some cities offer partial or full exemptions
- Gift transfers: some states exempt transfers where no money changes hands
- Government entities: sales to/from federal, state, or local governments
- Trusts and LLCs: transfers to an entity you already control may be exempt in some states
Exemption rules vary significantly. Always verify with your title company or a real estate attorney.
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