What are Transfer Taxes?

Posted by Haleigh Haffner Mulhern | Apr 27, 2023 | 0 Comments

Transfer taxes are fees charged by state or local governments when a property changes ownership in a real estate transaction. The taxes are typically based on the sale price or value of the property being transferred, and the amount can vary depending on the location of the property.

In most real estate transactions, the buyer is responsible for paying transfer taxes. However, in some cases, the seller may be responsible for paying a portion of the transfer taxes. It's important to review the terms of the purchase contract carefully to determine who is responsible for paying transfer taxes.

The purpose of transfer taxes is to generate revenue for state and local governments. The fees are often used to fund public projects, such as schools, parks, and infrastructure improvements. Transfer taxes are typically calculated as a percentage of the sale price or value of the property being transferred. The exact percentage can vary depending on the location of the property and the applicable state or local laws.

In addition to state and local transfer taxes, there may also be federal transfer taxes that apply in certain situations. For example, the federal government charges a transfer tax on certain types of real estate transactions, such as the transfer of a controlling interest in a partnership or corporation that owns real estate.

It's important to be aware of transfer taxes when buying or selling real estate, as they can add a significant amount to the overall cost of the transaction. Your real estate agent or attorney can help you understand the transfer tax requirements in your area and ensure that you are prepared to pay any applicable fees.

About the Author

Haleigh Haffner Mulhern

Haleigh Haffner is a graduate of Clemson University with a Bachelor's degree in Modern Languages. She graduated from Loyola University Chicago School of Law with a Juris Doctor and a certificate in Public Interest Law. Haleigh was sworn in to the Illinois Bar in January 2021. While at Loyola, Hal...


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