Real estate transfer taxes are charging the government imposes on transferring property from one owner to another. They differ from property taxes, fixed annual charges supporting local services, and transfer taxes, one-time charges paid at closing.
People pay real estate transfer taxes differently depending on where they live. Some states require the seller to pay the tax, while others require the buyer to pay the tax. Sometimes, the tax is split half and half between the buyer and the seller. The location determines the tax amount, usually a percentage of the property’s sale price.
Here’s Realtor Tom Gilliam with Homes 2 Move You is giving you a closer look at some critical aspects of real estate transfer taxes:
Who Pays Real Estate Transfer Taxes?
As highlighted above, the burden of providing real estate transfer taxes differs depending on the region. Some states allow the seller to remit the tax, while others will enable the buyer to do so. It also pays to note that there are cases where the tax is borne half by the buyer and the other half by the seller.
To know who is responsible for the payment of the transfer tax in your area, you can approach a local real estate agent or an attorney who is well conversant with the laws governing real estate in your area.
How Much Are Real Estate Transfer Taxes?
You will pay a real estate transfer tax that depends on the property’s location and sale price. Transfer taxes may vary between a few basis points and a few per cent of the cost, but here are some points to notice when buying property.
For instance, if you buy a property in New York City for $500,000, you will pay a transfer tax of 1%, which comes to $5000.
Factors Affecting Real Estate Transfer Taxes
The following things can determine the amount of real estate transfer tax you will be charged. Here are some of the most common:
- Location: As discussed earlier, transfer tax rates differ from state to state. Some states do not have transfer taxes, while others have rates that can reach 3% or even higher.
- Sale Price: The property’s sale price usually determines the transfer tax. This means that the higher the sale price, the higher the transfer tax charged on the property.
- Property Type: There are occasions when the property type one buys determines the transfer tax charged. For instance, some localities may have lower transfer tax rates for residential property than commercial property.
- Exemptions and Credits: Certain categories of buyers, such as first-time home buyers or veterans, may be eligible for some exceptions or deductions.
Confused about Real Estate Transfer Taxes? Realtor Tom Gilliam with Homes 2 Move You Can Help!
Buying a home is exciting, but closing costs can be a surprise. Realtor Tom Gilliam stays current on real estate regulations, including transfer taxes in your area. We’ll walk you through every step of the process, ensuring a smooth and transparent closing. Get a free consultation, and let us help you navigate the complexities of real estate—Contact Realtor Tom Gilliam with Homes 2 Move You today!