Mortgage Terms for Understanding: Real Estate Transfer Taxes
May 27, 2021, 10:03 AM
The more you know about the home buying process, the more confident you will be in making the critical decisions that will shape your homeownership experience. In addition to paying closing costs, there are other expenses involved in buying or selling a home. Depending on where you live, you may also have to pay for a real estate transfer tax, which is a tax on transferring a property’s title or deed.
What are Real Estate Transfer Taxes?
A real estate transfer tax, sometimes called a deed transfer tax, is a one-time tax or fee imposed by a state or local jurisdiction upon the transfer of real property. Usually, this is an “ad valorem” tax, meaning the cost is based on the price of the property transferred to the new owner. They are considered part of the closing costs in a home sale and are due at the closing. Real estate transfer taxes are different from property taxes, estate taxes, and gift taxes.
The rules of real estate transfer taxes vary by location. In many areas, the seller is responsible for payment, but in others, transfer taxes aren’t levied at all.
While many states levy a real estate transfer tax when a property title changes hands, several currently do not:
- New Mexico
- North Dakota
- Oregon (most counties)
Read more about the most common taxes and how they impact you on Metro’s FREE Save and Succeed. Let the mortgage team at Metro Credit Union mortgage help you with further questions and assist in fulfilling your homeownership dreams.