How to Calculate Property Transfer Taxes

The amounts per thousand used to calculate property transfer taxes are set by the county and/or the city. The amount used to calculate the tax can be different from location to location but is usually between $1 and $15 per thousand dollars in value transferred. Some places charge both a county transfer tax and a city transfer tax. Transfer taxes are charged in transactions involving the purchase or sale of real estate property. The tax is charged whenever change of ownership occurs on real estate in a county or city and is based on the value of the property transferred. The taxes are collected at the conclusion of a real estate transfer. In most places, the taxes are collected by a third party involved in the real estate transaction known as a title or escrow company. In cases where a title or escrow company is not used, the tax amount is paid directly to the county or city at the time when the deed or new ownership is recorded.

Things You'll Need

• Calculator
• Amount of value transferred
• Tax amount per thousand of the subject property

Instructions

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

Tips & Warnings

• Always use the actual sales price of the property being transferred and not the estimated value.

References

• Placer Title Company: Who Pays What in Your County