Closing Costs in Alabama 2026: Buyer & Seller Guide
Alabama taxes a deed at 50 cents per $500 of value, but only on the value above a mortgage that has paid the state’s separate tax of 15 cents per $100 of loan. Both taxes go to the county judge of probate before recording, and title insurers must charge their filed rates.
The deed tax: 50 cents per $500, minus the recorded mortgage
Ala. Code § 40-22-1 is a state tax, and it is the same in every county. The judge of probate collects it and sends two-thirds to the State Treasury and one-third to the county treasury (§ 40-22-1(g)). The rate is $0.50 for a conveyance worth $500 or less and $0.50 for each $500 “or fraction thereof” above that (§ 40-22-1(c)). The section was last amended by Act 2012-494.
The base is what separates Alabama from most states. Subsection (c) taxes “only the value in excess of any mortgages or vendor’s lien upon any property within this state on which the mortgage tax has been paid.” For a financed purchase, the deed tax is therefore figured on the price minus that loan, not on the full price.
The deed must come with proof of the actual purchase price, on a form the Department of Revenue designed for that purpose. Instruments that convey only leaseholds, easements or licenses, and recorded copies of original land grants by the United States or the State of Alabama, are excused from the proof. Without proof, the probate judge taxes the deed on the value from the most recent property-tax assessment. Anyone who intentionally withholds proof after the probate office asks for it, or submits false proof, owes a penalty of $100 or 25% of the tax due, whichever is greater. A form attested in good faith is not false proof (§ 40-22-1(c), (d), (h)).
Three kinds of instruments owe no deed tax under § 40-22-1(b): transfers of mortgages on which the mortgage tax was paid; deeds for nominal consideration that only perfect title; and re-recorded corrected instruments, plus conveyances executed before October 1, 1923. When co-owners who are tenants in common each sign a deed for the same consideration, only one of those deeds is taxed.
The statute names no buyer or seller as the payer. It only says the deed “shall not be received for record” until the tax is paid. Check how your purchase contract assigns it.
The 15-cent mortgage tax on the loan
Under § 40-22-2(1)a, a mortgage cannot be recorded until a privilege tax of $0.15 for each $100 “or fraction thereof” of the initial debt is paid. For an open-end or revolving line, the person recording chooses between the tax on the initial debt, under the procedures in § 40-22-2(2), and the tax on the maximum principal stated in the instrument; the tax never exceeds $0.15 per $100 of that maximum (§ 40-22-2(1)b). The tax is split the other way round from the deed tax: one-third to the county, two-thirds to the state (§ 40-22-2(7)). The section was last amended by Act 2004-490.
Owner financing is caught too. A deed that recites unpaid purchase money is treated as a mortgage for that balance, and the mortgage tax is collected along with the deed tax. The exception is a balance already secured by a recorded mortgage on which the tax was paid (§ 40-22-2(3)).
Same house, cash or financed
| $250,000 purchase | Deed tax (§ 40-22-1) | Mortgage tax (§ 40-22-2) | Both taxes |
|---|---|---|---|
| All cash | $250,000 ÷ $500 × $0.50 = $250 | none, no mortgage | $250 |
| $225,000 loan, mortgage tax paid | $25,000 ÷ $500 × $0.50 = $25 | $225,000 ÷ $100 × $0.15 = $337.50 | $362.50 |
This is a worked example of the two rates, not a survey of what Alabama buyers pay.
What the probate office charges to record
Deeds and mortgages are received for record in the office of the county judge of probate (§§ 40-22-1, 40-22-2). The general schedule in § 12-19-90(b) sets the amounts below. It does not apply everywhere: the 2000 increases in it do not apply in Mobile County or Cullman County (§ 12-19-90(e)), and local fee laws for a county’s probate judge stay in force (§ 12-19-90(d)). Mobile County’s probate court, for example, lists $2.50 per page and $1.00 per mortgage release.
- $3.00 per page for filing and recording any document (item 22);
- $1.00 for each grantor, grantee, mortgagor or mortgagee name beyond two in either index (item 24);
- $3.00 for each satisfaction of a mortgage (item 31), which applies when the seller’s loan is paid off.
Most counties have local acts in Title 45 that add to, or set, probate recording charges. In Mobile County there is a $10 surcharge on every instrument subject to deed or mortgage tax (§ 45-49-85.03), plus a $2 special fee on every recorded instrument (§ 45-49-85.04). Choctaw County adds $10 per instrument subject to either tax (§ 45-12-81.40, Act 2025-172). Randolph County authorizes a $5 fee that the probate judge may charge in full, in part or not at all (§ 45-56-83.66). Ask the probate office in the county where the property sits for its total.
Title insurance: filed rates, no rebates, no bidding
Each title insurer files its premium schedule with the Commissioner of Insurance. A filed rate can be used once 60 days pass without a written disapproval (§ 27-25-6(c)-(d)). Nobody may charge a premium except under the insurer’s filed rates in effect, rebates to the insured are prohibited, and no filing may provide for “negotiation or bidding” of the rate (§ 27-25-6(a)-(b)).
A reissue discount applies only if the insurer has filed a reissue rate and you “physically produce” the prior policy, including its schedules (§ 27-25-6(a)). Search, examination, document preparation and closing fees are excluded from the chapter’s definition of “premium” (§ 27-25-3(9)), so they are separate charges and not part of the filed rate. At or before closing, the title insurer or its agent must get the buyer’s signed statement acknowledging notice that owner’s coverage may be available, and saying whether the buyer wants it. The notice is not required when the buyer has elected owner’s coverage or the seller has elected or is contractually required to provide it, in foreclosure, court-ordered and tax sales, on transfers where no deed tax is payable, and when an existing owner only grants a security interest (§ 27-25-7(a), (c)).
Who may draft the deed
Section 34-3-6(c) lets title companies and abstractors search, certify and insure titles. It also prohibits them from preparing “deeds, conveyances, mortgages” unless they have a proprietary interest in the property, and it defines that drafting as practicing law. They may still prepare simple affidavits or statements of fact supporting their title policies, kept in their files and not recorded. Under § 34-3-6(a), only licensed lawyers may practice law. The same section does not stop anyone from “attending to and caring for his, her, or its own business.” A non-lawyer who does an act defined as practicing law commits a misdemeanor (§ 34-3-7).
Property tax falls due October 1
Unless another law provides otherwise, Alabama taxes become due on October 1 and are delinquent if not paid before the following January 1 (§ 40-11-4). The same section makes taxes “due and payable at once” in listed cases, among them a person who has moved or is about to move from the county, or who is “disposing of substantially all of his taxable property in the county.”
AHFA help with the down payment and closing costs
The Alabama Housing Finance Authority lists these programs on its site (read September 24, 2026). All are arranged through participating lenders.
- Step Up: 4% of the sales price, up to $10,000, secured by a 10-year second mortgage alongside a 30-year fixed first mortgage. Borrowers who earn $172,800 or less qualify, regardless of household size or location. It requires a credit score of 640, a debt-to-income ratio of 45% or lower and a homebuyer education course. It works with HFA Advantage conventional, FHA, VA and USDA loans.
- First Step: below-market 30-year fixed rates for first-time or repeat buyers, with down payment assistance of up to $10,000 or 4% of the sales price, whichever is lower. Borrowers must meet federal sales-price and income limits based on their area’s median income and must live in the home.
- Affordable Income Subsidy Grant: for HFA Advantage conventional loans only. The grant is 1% of the loan amount for borrowers at or below 50% of area median income (AMI, as published by Freddie Mac) and 0.5% for those at 50.01-80%. Qualifying income cannot exceed 80% of AMI, and the limit is set by the county where the home is. It requires a 640 credit score, a debt-to-income ratio of 45% or lower and a homebuyer education course.
Related pages: closing costs by state, Alabama state guide, Alabama homeowner insurance guide, down payment calculator, affordability calculator, mortgage calculator, mortgage pre-approval, refinance guide. Neighboring states: Florida, Georgia, Tennessee.
Alabama closing questions
Does a bigger down payment raise the Alabama deed tax?
Yes. A smaller loan leaves more of the price above the mortgage, and that part is taxed at $0.50 per $500. The mortgage tax drops faster, though: each $500 taken off the loan saves $0.75 of mortgage tax and adds $0.50 of deed tax.
Does the buyer or the seller pay Alabama’s deed tax?
Section 40-22-1 does not name a payer. It only bars the deed from being recorded until the tax is paid, so read the closing-cost clause of your purchase contract.
Can my title company prepare the deed?
No, unless it has a proprietary interest in the property. Section 34-3-6(c) bars title insurers and abstractors from drawing deeds and mortgages and treats that work as practicing law.
Can I negotiate the title insurance premium in Alabama?
No. The premium must follow the insurer’s filed rates, which cannot provide for negotiation or bidding, and rebates are prohibited. What you can do is compare insurers’ filed rates and, if the insurer filed a reissue rate, bring the prior policy with its schedules. Search and closing fees sit outside the premium.
What does the probate office charge to record the seller’s mortgage payoff?
The general fee for each satisfaction of a mortgage is $3.00 (§ 12-19-90(b)(31)), but Mobile and Cullman counties are outside that increase (§ 12-19-90(e)) and Mobile lists $1.00 for the release itself, before its other per-document charges. Many counties add their own fees under local acts in Title 45, so ask the probate office for its total.