Who Pays the Real Estate Transfer Tax?

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Local law and negotiation assign responsibility for the transfer tax.
Local law and negotiation assign responsibility for the transfer tax. (Image: Jupiterimages/Pixland/Getty Images)

Many state and local governments impose transfer taxes on real estate sales. (Ref 1) Buyers and sellers negotiate who pays the tax, and the sales contract reflects their decision. (Ref 2, for ex.)

Transfer Tax Negotiation

In a market with more buyers than homes for sale, the buyer might strengthen her offer by agreeing to pay the tax. Alternatively, a buyer may ask a seller to pay in order to reduce the amount of cash the buyer needs for closing costs. (Ref 3)

Put It in Writing

The sales contract should clearly state who pays the transfer tax. The standard contracts most real estate agents provide to their clients have sections where the parties make this selection. The California Association of Realtors purchase agreement, for example, lets the buyer and seller write in how they've allocated responsibility for the payment. (Ref 4, pg. 2)

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