As an adult, there is something we can all look forward to whether we find it good or bad, taxes!
Taxes are not just what we file yearly, but there are some forms of tax we may not know about, especially when it comes to home buying and selling. Today’s lesson is in transfer tax.
A transfer tax is a charge levied on the transfer of ownership or title from one individual or entity to another. How does this affect you? In Georgia, a transfer tax is charged whenever a property is sold and transferred from a seller to a buyer based on OCGA 48-6-1 et. seq
Shorthand for Calculating a transfer tax:
The transfer tax is approximately 1% of the sale price of the property.
If the property costs $100,000, then 1 % of that would be $100 (100,000 X .001 = 100)
If the property costs $252,975, then 1 % of that would be $252.98 roughly (252,975 x .001 = 252.975)
Who Pays the Cost?
As a seller, the transfer tax is usually a fee paid by you. However, if you and the borrower agree that you contribute to the closing cost, the borrower will typically pay the fee.
Exceptions to the tax:
1. Any transfer that is a gift;
2. Any transfer between spouses in connection with a divorce;
3. Any order for financial support to a surviving spouse or minor children related to probate;
4. Some deeds issued in lieu of foreclosure;
5. Any estate deed from an executor, administrator, guardian, or custodian (as long as the transfer is without valuable consideration (i.e., payment));
6. Any deed that affects the division of property among joint tenants or tenants in common if the transaction does not involve any consideration other than the division of the property.