Who typically pays transfer tax in real estate transactions, or how is it determined?

Who typically pays transfer tax in real estate transactions, or how is it determined?

• A. Buyer only.
• B. Lender.
• C. Seller or as negotiated.
• D. Local government.

Answer: (C)

Transfer tax is the fee due when title to a property changes hands. While the tax is collected by the local or state government, who pays it isn’t fixed by law. It’s determined by local practice and the terms of the sale contract. In most markets the seller is the one who pays the transfer tax, or the contract can assign that cost to the buyer or split it between both parties. Lenders don’t pay transfer tax, and the local government isn’t the payer—rather, it’s the party responsible for the closing costs as negotiated. That’s why the typical answer is that the seller or as negotiated.

Transfer tax is the fee due when title to a property changes hands. While the tax is collected by the local or state government, who pays it isn’t fixed by law. It’s determined by local practice and the terms of the sale contract. In most markets the seller is the one who pays the transfer tax, or the contract can assign that cost to the buyer or split it between both parties. Lenders don’t pay transfer tax, and the local government isn’t the payer—rather, it’s the party responsible for the closing costs as negotiated. That’s why the typical answer is that the seller or as negotiated.