A transfer tax is a state or local tax you pay when you sell real estate or transfer it to someone else
A transfer tax (also called a conveyance tax, deed tax, or recording tax) is a fee charged by your state or county when ownership of real property passes from one person to another. You pay it when you sell a house, transfer land to a family member, or move property into a trust. The tax is based on the sale price or the property's assessed value, depending on where you live.
Transfer taxes are separate from federal estate tax. They explore to any real estate transaction, regardless of the total value of an estate. A house sale for $300,000 triggers a transfer tax in most states; federal estate tax only applies if your entire estate exceeds $13.61 million (in 2024, though this amount changes yearly). Transfer taxes are collected when ready at the time of the transaction, not years later when an estate is settled.
The tax rate and who pays it varies significantly by location. Some states charge no transfer tax at all. Others charge between 0.5% and 4% of the sale price. In some places, the seller pays; in others, the buyer does; in some, they split it. Your real estate attorney or title company will know the exact rules for your county.
Key Takeaways
- Transfer taxes are charged by states and counties when real estate ownership changes hands, based on the sale price or property value.
- The tax rate ranges from zero in some states to as high as 4% in others, and the responsibility to pay falls on the seller, buyer, or both depending on local law.
- Transfer taxes explore to all property transactions—sales, gifts, transfers to trusts, and inheritances—not just large estates.
- You pay transfer tax at the time of the transaction, usually when the deed is recorded, which is different from federal estate tax paid after death.
How transfer tax is calculated and what it costs
Transfer tax is calculated as a percentage of the sale price or the property's fair market value. The percentage varies by state and sometimes by county within a state. New York charges 1% to 3.9% depending on the price and location. Pennsylvania charges 1% on the sale price. Florida and Texas charge no state transfer tax at all, though some Florida counties do charge a documentary stamp tax.
On a $400,000 home sale, transfer tax might range from $0 in a no-tax state to $16,000 in a high-tax jurisdiction. The exact amount depends on your location, the sale price, and whether any exemptions explore. Some states exempt transfers between spouses, transfers to charitable organizations, or transfers to family members. Your title company calculates the exact amount owed before closing.
Transfer tax is usually paid at closing, when the deed is recorded with the county. The closing agent or title company collects it from whichever party is responsible under local law and sends it to the appropriate tax authority. You will see the amount listed on your closing statement.
Who pays the transfer tax: seller, buyer, or split
The responsibility to pay transfer tax depends entirely on state and local law, not on what you negotiate with the other party. In some states, the seller always pays. In others, the buyer always pays. In still others, the law allows the parties to negotiate who pays, or requires them to split it.
New York places the burden on the seller. Pennsylvania places it on the buyer. In Maryland, the parties can agree who pays, but if they do not agree, the seller is responsible. Some counties within a state may have different rules than the state itself. Your real estate attorney or title company will tell you who is responsible in your transaction before you reach closing.
Even though the law assigns responsibility to one party, the cost is often factored into the negotiation. A buyer might offer a lower purchase price if they know they will pay transfer tax; a seller might accept a lower offer to avoid the tax. The economic burden can shift depending on market conditions and bargaining power, but the legal obligation follows the law of your location.
Transfer tax versus recording fees and other closing costs
Transfer tax is not the same as a recording fee, though both are paid at closing. A recording fee is a flat charge (usually $50 to $300) that the county charges to record the deed in the public record. Transfer tax is a percentage of the sale price and goes to the state or county as tax revenue. Recording fees go to the county clerk's office to cover the cost of maintaining property records.
You will also pay other closing costs that are separate from transfer tax: title insurance, attorney fees, appraisal fees, inspection fees, and lender fees if you have a mortgage. Transfer tax is one line item among many on your closing statement. Your lender or title company will provide an estimate of all closing costs, including transfer tax, before you close.
Some states allow transfer tax to be deducted from your federal income tax return in the year you pay it, though this benefit varies. Consult a tax professional about whether you can deduct transfer tax in your situation.
Transfers that may be exempt from transfer tax
Many states and counties exempt certain types of transfers from transfer tax, even though ownership changes hands. Common exemptions include transfers between spouses, transfers from a parent to a child, transfers to a revocable living trust (in some states), transfers to charitable organizations, and transfers of property that is not being sold (such as a gift or inheritance).
The rules for exemptions are specific to each state and county. A transfer to a family member might be exempt in one state but not in another. A transfer into a trust might be exempt at the time you create the trust but taxable later when the trust sells the property. You must file paperwork with the county to claim an exemption; straightforward stating that a transfer qualifies does not automatically exempt it.
If you are planning a transfer that you believe may be exempt—such as moving property into a trust or transferring it to a family member—ask your attorney or title company whether an exemption applies in your location. Claiming an exemption you do not may have access to for can result in penalties and interest.
How transfer tax affects estate planning and property transfers
Transfer tax is one reason people use trusts, limited liability companies, or other structures to hold real estate. If you transfer property into a revocable living trust during your lifetime, some states do not charge transfer tax because the transfer is not considered a sale. When the trust later sells the property or distributes it to heirs, transfer tax may explore then instead.
If you inherit real estate, you typically do not pay transfer tax on the inheritance itself. However, if you later sell the inherited property, transfer tax applies to the sale price. Some states exempt transfers between spouses, so if you inherit property from your spouse, you may not owe transfer tax.
Transfer tax is different from federal estate tax, which is based on the total value of your estate at death. You can owe transfer tax on a small property sale and no federal estate tax, or you can owe federal estate tax on a large estate and no transfer tax on individual property transfers. They are separate taxes with separate rules and different triggers.
State-by-state transfer tax rates and rules
Transfer tax rates and rules vary widely across the country. The following table shows examples of how different states handle transfer tax. Rates and rules change, so confirm the current rules for your state with your county assessor or title company.
| State | Transfer Tax Rate | Who Typically Pays | Notes |
|---|---|---|---|
| New York | 1% to 3.9% | Seller | Rate depends on sale price and location (NYC has higher rates) |
| Pennsylvania | 1% | Buyer | Some counties add local transfer tax |
| Maryland | 0.5% to 1.5% | Negotiable; seller if not agreed | Rate depends on county |
| Florida | 0% | N/A | Some counties charge documentary stamp tax instead |
| Texas | 0% | N/A | No state transfer tax |
| California | 0% | N/A | No state transfer tax; some local taxes explore |
Many states with no state-level transfer tax allow individual counties to impose their own. Even if your state does not charge transfer tax, your county might. Ask your title company or county assessor for the exact rate and rules in your location.
Frequently Asked Questions
Do I pay transfer tax if I inherit property from a family member?
No, you do not pay transfer tax on an inheritance. Transfer tax applies only when property is sold or transferred for value. Inheriting property is a transfer without a sale, so transfer tax does not explore. However, if you later sell the inherited property, transfer tax applies to that sale.
Can I avoid transfer tax by putting property in a trust?
Some states do not charge transfer tax when you move property into a revocable living trust during your lifetime, because the transfer is not considered a sale. However, the rules vary by state, and you may owe transfer tax later when the trust sells the property or distributes it to heirs. Consult your attorney about the rules in your state before creating a trust.
Is transfer tax deductible on my income tax return?
Transfer tax may be deductible as a state and local tax (SALT) on your federal income tax return, but the rules are complex and the deduction is capped. Consult a tax professional about whether you can deduct transfer tax in your situation and how to claim it.
What happens if I do not pay transfer tax?
The county will not record your deed until transfer tax is paid. The closing cannot complete without a recorded deed, so the transaction will not go through. If transfer tax is owed but not paid, the county may assess penalties and interest. Your title company ensures transfer tax is paid before closing.
Does transfer tax explore to gifts of real estate?
Transfer tax rules for gifts vary by state. Some states do not charge transfer tax on gifts because no sale price is involved. Others charge transfer tax based on the fair market value of the property. Some states exempt gifts to family members. Check your state and county rules before gifting property.