Transfer tax is a local or state charge triggered when Real Estate ownership changes, calculated as a percentage of the home's price or value.
Transfer taxes are separate from recording fees and mortgage recording taxes, and they also differ from capital gains taxes tied to shorter ownership periods.
Who covers the tax depends on the property's location, local custom, market conditions, and negotiation, with buyers, sellers, or both potentially sharing costs.
Transfer tax is assessed against either the sale price or fair market value, and laws often describe it as a charge per $500.
For gifts or inheritances, federal estate or gift taxes may apply instead; on home sales, transfer taxes aren't deductible, though one tax can offset another.