Most buyers and sellers in the housing market anticipate some tax consequences or implications from the purchase or sale of a home. And, it's natural for buyers and sellers to focus on federal tax issues, and particularly how the deal will impact your federal income taxes.
But, it's important to keep in mind that most states impose various taxes on home sales including "transfer and recording taxes." It can come as a surprise to you when you find out at closing that you have to pay these taxes, which can be a significant amount of money.Not all states have these taxes, and in those that do, not only do the tax rates vary, but the taxes have various names,
such as:
Transfer Tax.Recording Tax, Deed Recording Tax, Mortgage Recording Tax, or Mortgage Tax,Documentary Transfer Tax, Stamp Tax.
So, be careful to check the laws in your area to see if a transfer and recording tax will be applied to your transaction, and if so, how much the tax will be. Or, early on in the transaction, ask your real estate or tax attorney who might be helping you during the purchase and sale.
