What Are Real Estate Transfer Taxes
Transfer tax rates swing from $0 in Texas and 12 other states to roughly 4.278% in Philadelphia — same type of transaction, radically different bills. A $500,000 sale can cost you nothing in Houston or $10,000+ in New York City (where the state rate, NYC's Real Property Transfer Tax, and the 1% mansion tax all stack). Florida calls it a documentary stamp tax, Washington calls it REET, Connecticut calls it a conveyance tax — different names, same math. Don't let the naming convention fool you.
Transfer taxes are a closing cost that can add significantly to the total expense of buying or selling a home. On a $500,000 property, transfer taxes can range from $0 in states with no transfer tax to over $10,000 in high-tax jurisdictions like New York City (where city and state taxes combine). Whether the buyer, the seller, or both parties pay the transfer tax depends on state law and local custom — and in many transactions, it is negotiable.
Understanding your state's transfer tax rate and who customarily pays it helps you budget accurately for closing. For more on all closing costs, see our guide on closing costs explained. To estimate your total closing costs including transfer taxes, use our Closing Cost Estimator.
States With No Transfer Tax
Several states do not impose a state-level real estate transfer tax, making them among the most affordable states for closing costs. These include Alaska, Idaho, Indiana, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon, Texas, Utah, and Wyoming. In these states, real estate transfers are recorded without a state transfer tax, though recording fees still apply.
However, the absence of a state transfer tax does not necessarily mean the transaction is tax-free. Some of these states allow local governments to impose their own transfer taxes or fees. For example, while Oregon has no state transfer tax, the Portland metro area imposes a Regional Housing Supportive Services Tax on residential property sales of $500,000 or more. Similarly, some Louisiana parishes charge minimal document recording fees that function like transfer taxes.
If you are buying or selling in a no-transfer-tax state, your closing costs will generally be lower than in states that impose them. But do not assume there are no government charges — recording fees, intangible taxes (in some states), and local assessments can still apply. Check with your title company or real estate attorney for the specific charges in your county.
Low Transfer Tax States (Under 0.5%)
Many states impose transfer taxes at rates below 0.5% of the sale price. Arizona charges a flat $2 per deed (plus $2 per $1,000 in some counties). Colorado charges $0.01 per $100 (0.01%). Iowa charges $0.80 per $500 of value (0.16%). Michigan charges $3.75 per $500 for the state tax plus $0.55 per $500 for the county tax (combined approximately 0.86%). Ohio charges $1.00 per $1,000 for the state conveyance fee (0.1%) plus local permissive taxes that vary by county. Virginia charges $0.25 per $100 of value (0.25%) for the state grantor's tax plus additional regional congestion relief fees in Northern Virginia.
In these states, transfer taxes are a modest cost — typically a few hundred to a few thousand dollars on an average-priced home. Who pays varies by custom: in Virginia, the seller traditionally pays the grantor's tax, while the buyer may pay the grantee's tax (if applicable in the locality). In Michigan, the seller customarily pays both the state and county transfer taxes. In Ohio, the seller typically pays the conveyance fee.
Even at low rates, transfer taxes add up on expensive properties. On a $1 million property in Virginia, the 0.25% grantor's tax alone is $2,500. If you are budgeting for a high-value transaction, do not overlook transfer taxes just because your state's rate is low. Enter your sale price and state into our Closing Cost Estimator for a precise calculation.
High Transfer Tax States and Jurisdictions
Some states and cities impose transfer taxes well above 1%, making them a major closing cost consideration. New York has a state transfer tax of $2 per $500 (0.4%) for properties under $3 million, plus an additional "mansion tax" of 1% on residential properties selling for $1 million or more. In New York City, the city's Real Property Transfer Tax adds another 1% for properties under $500,000 and 1.425% for properties at or above $500,000. A $2 million Manhattan apartment sale triggers approximately $57,250 in combined state and city transfer taxes.
Connecticut charges a 0.75% state conveyance tax, with an additional 0.25% surcharge on sales above $800,000, making the effective rate 1% for high-value properties. The District of Columbia charges 1.1% for properties under $400,000 and 1.45% for properties at or above $400,000. Washington State charges a graduated Real Estate Excise Tax (REET) ranging from 1.1% on the first $525,000 of value up to 3% on the portion above $3,025,000 (rates as of 2026, adjusted periodically by the Washington Department of Revenue).
Delaware and Pennsylvania both impose transfer taxes above 2% when state and local taxes are combined. Delaware's state transfer tax is 2.5% (split evenly between buyer and seller by custom), while Pennsylvania charges a 1% state tax plus local taxes that vary by municipality — Philadelphia's combined rate is approximately 4.278%, one of the highest in the nation. These high rates significantly affect net proceeds for sellers and cash-to-close requirements for buyers.
Who Pays the Transfer Tax: Buyer, Seller, or Both
Who is responsible for paying the transfer tax depends on state law and local custom, and the answer is not always straightforward. In many states, the law specifies which party is legally liable for the tax. In Florida, the seller is responsible for the documentary stamp tax (Florida Statute §201.02), though the parties can contractually agree to shift the cost. In New York, the seller pays the state transfer tax, but the buyer pays the mansion tax (if applicable). In New Hampshire, the buyer and seller split the transfer tax equally by statute.
In states where the law does not specify, local custom determines who pays. In California, the practice varies by county — in Southern California, the seller traditionally pays the county transfer tax, while in the Bay Area, the buyer and seller may split it. In Illinois, the seller customarily pays the state and county transfer taxes, while the buyer pays the city transfer tax in Chicago. Your real estate agent should be able to tell you the prevailing custom in your area.
Remember that transfer tax responsibility is often negotiable as part of the purchase agreement, regardless of who customarily pays. In a seller's market, the buyer may agree to pay the transfer tax to make their offer more attractive. In a buyer's market, the seller may offer to cover the tax as a concession. If you are negotiating a real estate transaction, understand your state's default rule but do not assume it is set in stone.
Common Exemptions and Reductions
Most states provide exemptions from transfer taxes for certain types of transactions. The most common exemptions include transfers between spouses (including transfers pursuant to divorce), transfers to or from a living trust where the transferor is the beneficiary, transfers by gift (with no consideration paid), transfers by inheritance or bequest (following the owner's death), transfers to government entities, and transfers by nonprofit organizations for charitable purposes.
Some states offer additional exemptions or reduced rates for first-time homebuyers, low-income purchasers, or properties below a certain value. New York City exempts transfers of residential property valued under $500,000 from the city's transfer tax (the state tax still applies). The District of Columbia offers a reduced rate for qualified first-time homebuyers purchasing properties under a specified threshold. Virginia exempts transfers valued under $100 from the grantor's tax.
If you believe an exemption may apply to your transaction, raise it with your title company, real estate attorney, or closing agent well before the closing date. Exemptions typically require specific documentation — such as proof of family relationship, trust documentation, or first-time buyer certification — and failing to provide the documentation at closing means the tax will be assessed at the full rate. Check your state attorney general's office or your state's department of revenue website for a complete list of exemptions available in your jurisdiction.
How Transfer Taxes Affect Your Bottom Line
For sellers, transfer taxes directly reduce your net proceeds from the sale. On a $600,000 property in a state with a 1% transfer tax, that is $6,000 off the top — money that comes out of your equity, not the buyer's pocket (unless you have negotiated otherwise). When combined with real estate agent commissions, title insurance, and other seller closing costs, the total can consume 7% to 10% of the sale price. Factor transfer taxes into your pricing strategy and your calculation of what you will actually walk away with after the sale.
For buyers, transfer taxes increase the amount of cash you need at closing. If you are already stretching to cover the down payment and other closing costs, an unexpected transfer tax can be a deal-breaker. Ask your real estate agent and lender about transfer taxes early in the process so you can incorporate them into your budget. If the transfer tax in your jurisdiction is high, consider negotiating with the seller to cover part or all of it.
For investors and house flippers who buy and sell properties frequently, transfer taxes are a recurring cost that must be factored into every deal analysis. A property purchased for $300,000 and sold for $400,000 in a 2% transfer tax state incurs approximately $14,000 in combined buyer-side and seller-side transfer taxes across both transactions — a significant drag on returns. Use our Closing Cost Estimator to model these costs accurately before committing to a transaction.
Disclaimer: This article is for general educational purposes only and does not constitute legal advice. Made For Law is not a law firm, and our team are not attorneys. We are not affiliated with any federal, state, county, or local government agency or court system. Content may be researched or drafted with AI assistance and is reviewed by our editorial team before publication. Laws change frequently — always verify information with official sources and consult a licensed attorney for advice specific to your situation. Full disclaimer
Our editorial team researches and summarizes publicly available legal information. We are not attorneys and do not provide legal advice. Every article is checked against current state statutes and official sources, but you should always consult a licensed attorney for guidance specific to your situation.
