Transfer taxes are one-time fees that can add thousands of dollars to a real estate transaction, depending on where you live. Whether you’re buying a charming brownstone in Brooklyn, NY, or selling a ranch-style home in Tucson, AZ, understanding how transfer taxes work can help you avoid surprise costs and negotiate smarter deals.
In this Redfin guide, we’ll unpack what transfer taxes are, who pays them, how much they typically cost, and how they vary across states and situations.
What Are Transfer Taxes?
A transfer tax is a government-imposed fee charged when ownership of a property legally transfers from one person or entity to another. Most often, this tax applies when you sell or buy a home or land parcel.
Transfer taxes are usually levied by state, county, or city governments and are calculated based on the property’s sale price or assessed value. Depending on your location, you might also hear these called deed taxes, stamp taxes, or real estate transfer taxes.
When Do Transfer Taxes Apply?
You can expect transfer taxes to kick in during:
- Residential home sales
- Commercial property transactions
- Property gifts
- Property inheritances
While some buyers and sellers assume these taxes are bundled into other fees, transfer taxes are typically charged separately—and the amount can vary widely depending on your property’s location.
Who Pays Transfer Taxes?
In most states, the seller covers the transfer tax, but local customs and agreements can shift this responsibility. Sometimes, the cost is split between buyer and seller or negotiated as part of the sale.
Here are a few examples:
- California: Sellers usually pay the county transfer tax, though some cities add extra fees that can be negotiated.
- Pennsylvania: Buyers and sellers typically split the tax equally.
- Texas and Montana: No real estate transfer taxes at all.
Make sure to review your purchase agreement and local laws to clarify who is responsible.
How Much Do Transfer Taxes Cost?
Transfer taxes usually come as:
- A percentage of the sale price (often between 0.5% and 2.0%)
- A flat fee per $100 or $500 of property value
To estimate your transfer tax:
- Know your property’s sale price.
- Find your local transfer tax rate.
- Multiply the sale price by the rate (e.g., 1.25% means multiply by 0.0125).
- Add any city or local surcharges.
- Check for exemptions or discounts, such as for first-time buyers or family transfers.
States Without Statewide Transfer Taxes
Fourteen states don’t impose a statewide transfer tax:
Alaska, Idaho, Indiana, Louisiana, Kansas, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon (most counties), Texas, Utah, and Wyoming.
These states may still charge other fees like recording or administrative costs at closing.
Tax Benefits and Other Related Taxes
Transfer taxes aren’t deductible on your federal tax return. However, you can add them to your home’s cost basis, potentially lowering capital gains tax when you sell. This is especially useful for investors or long-term homeowners.
Besides traditional transfer taxes, other related taxes may apply if property ownership changes through inheritance or gifts:
- Estate Tax: Paid by the deceased’s estate, applies if the estate exceeds federal exemption limits ($13.99 million in 2025).
- Inheritance Tax: Paid by heirs in some states like Maryland, Iowa, and Kentucky.
- Gift Tax: Applies to property or money given during someone’s lifetime, with an exemption of up to $19,000 per recipient in 2025.
- Generation-Skipping Transfer Tax: Applies when assets skip a generation, like passing from grandparent to grandchild.
These taxes help prevent tax avoidance through complex transfers.
Why Transfer Taxes Matter Today
With rising home prices and fluctuating mortgage rates, closing costs—including transfer taxes—can take a bigger bite out of your budget. For example, the median U.S. home price in Q1 2025 was $432,500. At a 1% transfer tax rate, that’s an extra $4,325 in fees, on top of agent commissions and other closing costs.
Whether you’re buying in Chicago or San Diego, understanding transfer taxes helps you plan your finances and negotiate effectively.
Quick FAQs About Transfer Taxes
What are transfer taxes when selling a home?
They’re one-time fees charged by local governments when property ownership transfers to a new owner.
Are transfer taxes the same as property taxes?
No. Property taxes are ongoing annual taxes, while transfer taxes are paid once during the sale.
Can I avoid paying transfer taxes?
Some transfers—like those between spouses or to certain trusts—may be exempt. Check your state’s rules or consult a real estate attorney.
Are transfer taxes part of closing costs?
Yes, but they’re usually listed separately, not lumped into your mortgage fees.