Transfer Tax

· 2 min read
Transfer tax is a fee charged by your state, county, or city when property changes hands — and in most places, the seller pays it.…

Transfer tax is a fee charged by your state, county, or city when property changes hands — and in most places, the seller pays it. The amount varies wildly depending on where you live, from nothing in some states to thousands of dollars in others.

How Transfer Tax Works

When you sell your home, the government charges a tax based on the sale price (or sometimes the assessed value). This tax goes by different names depending on location — transfer tax, deed tax, conveyance tax, excise tax, or documentary stamp tax. Same concept, different labels.

The tax is typically calculated as a flat rate per $500 or $1,000 of the sale price. In Pennsylvania, for example, it’s 1% of the sale price split between buyer and seller. In New York City, sellers pay 1% on sales under $500,000 and 1.425% above that.

What You’ll Pay

Some states charge nothing — Texas, Missouri, and a handful of others don’t levy transfer taxes at all. On the other end, selling a $1 million home in New York City can trigger $14,250+ in transfer taxes before you even account for the separate “mansion tax.”

Most states fall in the $1-$5 per $1,000 range. On a $400,000 sale, that works out to $400-$2,000. Not pocket change, but not usually a deal-breaker either.

Who Actually Pays

Custom varies by state and can be negotiated. In most of the country, the seller covers it. In some areas, buyer and seller split it. In a few markets, the buyer traditionally pays. Your purchase agreement should spell out who’s responsible.

Don’t assume — ask your agent or closing attorney what’s standard in your area and make sure it’s written into the contract.

Exemptions

Some transfers are exempt from the tax. Transfers between spouses (including divorce settlements), inheritance, gifts to family members, and transfers to trusts often avoid the tax entirely. Rules vary by jurisdiction, so check with your title company or attorney.

Factor transfer tax into your selling costs using the net proceeds calculator. The selling guide covers all the closing costs you should expect when selling.