How real estate transfer tax works
Transfer tax is charged by a state, county or city when property changes hands. Rates and names vary: deed tax, documentary stamp tax, recording tax. Some states charge none.
The formula
Transfer tax = sale price × transfer tax rate
Worked example
A $400,000 sale taxed at 0.5% incurs $2,000 in transfer tax.
How to use this calculator
Enter the sale price, the transfer tax rate for your state or county and the share paid by the seller. The transfer tax calculator multiplies the price by the rate and shows the tax due on the sale, how much the seller pays, how much the buyer pays and the tax per $1,000 of price. If more than one level of government charges the tax where you live, add the rates together or run each one separately and add the results.
What the result means
The result is a one-time charge paid when the sale closes. It is separate from the yearly property tax and from your lender’s fees. Whether it comes out of the seller’s proceeds or is added to the buyer’s costs depends on local rules and on what the contract says.
If you are getting a loan, check the amount on your Closing Disclosure. Your lender must provide that document at least three business days before closing.
More examples
The table shows a $400,000 sale at four example rates. Look up the real rate for your area before you rely on a figure.
| Example rate | Tax on $400,000 |
|---|---|
| 0.1% | $400 |
| 0.5% | $2,000 |
| 1% | $4,000 |
| 2% | $8,000 |
When the rate is quoted per $500 or per $1,000
Divide the price by the unit, then multiply by the charge.
- An example charge of $1.00 per $500: $400,000 ÷ $500 = 800 units. 800 × $1.00 = $800. That is the same as a 0.2% rate.
- An example charge of $3.50 per $1,000: $400,000 ÷ $1,000 = 400 units. 400 × $3.50 = $1,400. That is the same as a 0.35% rate.
What changes the result
- Sale price. The tax rises in step with the price.
- Location. The rate depends on the state, county and city. Some states charge nothing.
- Number of taxing bodies. A state tax and a local tax can both apply to the same sale.
- Who pays. The total is the same, but your share can be all, half or none of it.
Rules vary by state. Your county recorder, title company or closing agent can confirm the rate, any exemptions and who normally pays.
Common mistakes
- Entering a rate quoted per $1,000 as if it were a percentage.
- Counting the state tax and missing a county or city tax.
- Assuming the seller always pays.
- Confusing transfer tax with yearly property tax.
- Leaving it out of the closing budget because it is not a lender fee.
Related calculators
Transfer tax is one of several costs settled at closing. Buyers can total theirs with the closing cost calculator. Sellers can see what is left after the tax, the agent’s fee and the loan payoff with the home sale proceeds calculator and the real estate commission calculator.
Frequently asked questions
Who pays transfer tax?
It depends on local rules and custom. Sellers often pay, and in some places it is split.
Is the rate always a percentage?
Some places quote it per $500 or per $1,000 of price.
Is transfer tax deductible?
No. Sellers treat it as a selling cost and buyers add it to their basis.
Is transfer tax the same as property tax?
No. Transfer tax is charged once, when the property changes hands. Property tax is charged every year you own the property.
How do I turn a rate per $1,000 into a percentage?
Divide the charge by 10. A charge of $3.50 per $1,000 is 0.35%. For a rate per $500, divide by 5, so $1.00 per $500 is 0.2%.
Does every state charge a transfer tax?
No. Some states charge none, and in others the rate differs by county or city.
Can the buyer and seller agree on who pays?
Often yes, through the purchase contract, where local rules allow it. Ask your agent or closing agent what is usual in your area.