How to Calculate Property Transfer Taxes
- 1). Determine the amount of value being transferred. This is the purchase price in a real estate sale transaction. The sales price is disclosed in many places, but the most reliable figure is on the closing estimate. The closing estimate is provided by the title or escrow company in real estate transfer transactions using this common third party practice.
- 2). Figure out who’s responsible for paying the property transfer tax in your county or city by contacting the government offices directly. This information is often available via the internet on their website or can be provided by the title or escrow company processing the transaction. The seller or person giving the value is usually responsible for all or a portion of the tax, but in some places the buyer is required to pay the entire amount. In real estate sales transactions, this is determined in advance during the negotiations and is disclosed on the purchase contract.
- 3). Calculate the property transfer tax amount after you have determined the responsible party for paying the tax and the amount charged per thousand transferred. Calculate the tax by multiplying the sales price or value being transferred by the “amount per thousand” charged by the county and/or city of the transaction.
- 4). Consider this example of the calculation of property transfer taxes for a sales transaction in Sacramento, California. The example is based on a $200,000 property sales price.
Seller Pays for County Transfer Tax: $1.10 per thousand transferred
200 x $1.10 = $220
= $220 to be paid by seller at recordation of new ownership
Both parties split 50/50 the City Transfer Tax: $2.75 per thousand transferred
200 x $2.75 = $550
= $275 each to be paid by the seller and the buyer at recordation of new ownership
Summary:
Seller to pay a total of $495 at recordation of new ownership
Buyer to pay a total of $275 at recordation of new ownership
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