What is a Transfer Tax?
A transfer tax (also called a deed transfer tax, conveyance tax, or documentary stamp tax) is a tax imposed by state, county, or municipal governments when real property ownership is transferred from one party to another. The tax is typically calculated as a percentage of the sale price or a fixed amount per thousand dollars of value.
Transfer tax rates and structures vary widely by location. Some states have no transfer tax (Texas, for example, has no state-level transfer tax). Others impose significant taxes: New York City charges 1-2.625% depending on price, and the state adds 0.4%. The highest combined transfer taxes in the U.S. can exceed 3% of the sale price.
Who pays the transfer tax
Local custom determines who pays. In most markets, it is the seller's responsibility, treated as a closing cost. However, this is negotiable. In some states, both buyer and seller pay their own portion. In investor transactions, the payment responsibility can be assigned to either party in the purchase agreement.
Transfer tax by state examples
| State | Rate | Notes |
|---|---|---|
| Texas | None | No state transfer tax |
| Florida | $0.70 per $100 | 0.7% of sale price (seller pays) |
| California | $1.10 per $1,000 | 0.11% state + county/city additions |
| New York | $2-$4 per $500 | 0.4-0.8% state + NYC adds 1-2.625% |
| Pennsylvania | 2% | Split 1% each buyer and seller |
Transfer taxes and investor deals
For flip investors, transfer taxes apply twice: once when you buy and once when you sell. In high-tax states, this can add 2-6% to your total transaction costs. For wholesalers who assign contracts, transfer tax typically applies only once (the end buyer's closing). For double close transactions, both closings incur transfer tax, which is an additional cost compared to assignment.