Who Pays For Real Estate Transfer Tax ?
When it comes to buying or selling a home, you should know what are the legalities involved if you do not want to get into trouble with the authorities. |
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One such legality that is the payment of real estate transfer tax. Most states in the US levy real estate transfer tax, but the main question that arises is that who pays for the real estate transfer tax.
The real estate transfer tax is paid when the deal is closed. It is calculated based on the value of the property. Usually this tax is used for specific purposes by the state, county or local government. Invariably it is used for environment protection and land conservation.
Different states have different methods of calculating the real estate transfer tax. Also, who pays the tax changes from one state to the next. For example, in Georgia the seller is responsible for paying the tax, and he has to pay $1 for the first $1,000 and thereafter $0.10 for every $100. In New Hampshire, there is a fixed rate for real estate transfer tax, which is 1.5 percent of the price that the property was purchased at, and the amount has to be shared equally by the seller and the buyer. However, in some states, there are no laws to say who pays for the real estate transfer tax. In this case, the buyer and the seller negotiate during the deal who would be responsible for it.
There are 13 states in the US that do not levy real estate transfer tax. These states are Alaska, Arizona, Idaho, Indiana, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon, Texas and Utah. In Arizona, while there is no transfer tax, you would have to pay $2 to record the deed. In Louisiana, the transfer tax is left to the discretion of local government as is the case also in California.
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