Transfer taxes are one-time fees that can add thousands to a real estate deal, depending on your location. Whether you’re purchasing a brownstone in Brooklyn, NY, or selling a ranch-style home in Tucson, AZ, understanding how transfer taxes work can help you avoid unexpected costs and negotiate smarter.
In this Redfin guide, we’ll break down what transfer taxes are, who pays them, how much they cost, and how they vary by state and situation.
What are transfer taxes in real estate?
A transfer tax is a government-imposed fee on the transfer of property ownership from one person or entity to another. In real estate, it’s typically assessed when a home or parcel of land is sold and legally changes hands.
Transfer taxes are usually charged at the state, county, or municipal level, and are based on the property’s sale price or assessed value. These taxes are also referred to by other names like deed tax, stamp tax, conveyance tax, or real estate transfer tax, depending on the jurisdiction.
When do transfer taxes apply?
Transfer taxes most commonly apply during:
- Residential home sales
- Commercial property transactions
- Gifts of real estate
- Inheritance of property
While many buyers and sellers assume these taxes are built into other fees, transfer taxes are usually charged separately and vary widely depending on where the property is located.
Who pays the transfer tax – buyer or seller?
In most states, the seller is responsible for paying the transfer tax. However, the responsibility can vary by location and may be split or negotiated between buyer and seller.
Here are a few examples::
- California: Sellers usually pay the county transfer tax, while some cities add an additional tax that may be negotiated.
- Pennsylvania: Both buyers and sellers usually split the tax equally.
- Texas or Montana: no real estate transfer tax is charged at all.
It’s important to review your purchase agreement and local…