When buying or selling property, a Transfer Tax Disclosure is a crucial document that clarifies who pays the property transfer tax—a one-time tax imposed by state or local governments when property ownership changes. This form lists the sale price and assigns responsibility for the tax, ensuring the county recorder has a clear record.
Transfer taxes vary by jurisdiction and are calculated as a percentage of the sale price. For example, a 1% rate on a $400,000 home means $4,000 due. The disclosure form, signed by both parties, confirms the sale amount and who pays, whether the buyer, the seller, or both.
There is no uniform rule on who pays transfer tax in the U.S. In California and New York, sellers typically pay, while in Pennsylvania and Washington D.C., the cost is often split. These terms should be negotiated and documented in the purchase agreement and reflected in the Transfer Tax Disclosure.
Common mistakes include overlooking local customs, failing to negotiate who pays, or miscalculating rates. Always verify current rates and rules with local authorities or through a title company.
For reliable property transfer tax rates and detailed local practices, check your county’s official website or consult with a real estate professional. Also, understanding related documents like Estimated Closing Costs and the role of the Settlement Agent can help ensure a smooth transaction.
For more detailed IRS and state guidelines on property taxes, visit IRS.gov.
