Question : What is real estate transfer tax?
Answer: Real Estate Transfer Tax, also known as Conveyance Tax, is a tax on the sale, granting, and transfer of real property or an interest in real property. The tax is set by statute by the state, county, city, or other municipalities, such as a township or borough. Total transfer taxes range from very small (for example, in Colorado) to relatively large (in the city of Pittsburgh).
Question : Who pays transfer tax?
Answer: Most often, transfer tax is paid by the seller; however, the customary practices vary by state and county. We provide the customary split between buyer and seller, but these are only customary splits and may be negotiated differently for a particular transaction. We suggest a review of the sales contract prior to disclosing taxes on a GFE.
Question : What is mortgage tax?
Answer: Not all municipalities charge a mortgage tax. Those that do, charge the tax when a mortgage is recorded. Some do not charge the mortgage tax in a purchase transaction when a deed tax is greater than the mortgage tax, others charge both a transfer tax and a mortgage tax regardless. Some reduce the mortgage tax when the lender on the new mortgage is the same as the old mortgage. Some charge mortgage tax only on new money, while others charge the tax on the full loan amount every time.
Question : What is intangible tax?
Answer: Intangible recording tax is currently charged in two states, Florida and Georgia. In real estate transactions, the mortgage or deed of trust shows the loan amount on which the intangible tax is calculated.
Question : What are the common exemptions on transfer taxes and mortgage taxes?
Answer: There are several exemptions that eliminate the taxes on a transaction, but each municipality sets their own rules on exemptions. Many require forms and affidavits to claim the exemption. The most common exemptions are:
  • A transaction involving a government agency or institution
  • A transaction where the lender is a federal credit union
  • A transaction involving a divorce
  • A transaction involving a bankruptcy
  • A transaction involving moving a transaction in and out of a living trust
  • A transaction involving a cure of title
  • A transaction involving a gift
Question : What are the common reasons documents are rejected for recording?
Answer: The most common reason for rejection is incorrect or insufficient funds. Some counties will record documents if there is an overage and refund the difference, but many will not. It is important to send the documents for recording with the correct amount. The top five reasons for rejection are:
  • Incorrect or insufficient funds
  • Incorrect formatting, especially margins
  • Missing or incorrect notary acknowledgments
  • Missing signatures
  • Missing or incorrect legal descriptions
Question : Can documents be recorded if there is a formatting issue?
Answer: In some cases, yes. Some recording offices will record documents even with formatting errors if a non-compliance fee has been included. Other recording offices will not record documents, instead the documents are returned.
Question : What are the formatting requirements?
Answer: While these vary by county, most require or appreciate a cover page that provides instructions. Each document being recorded may have its own unique set of formatting requirements, but generally, formatting requirements determine the paper size (often 8 1/2"x11"), 1" margins, except on the first page which often requires a 3" margin for the stamps. Most recording offices also have a font size restriction which is commonly 10 pts.
Question : Will I get my documents returned after they are recorded?
Answer: Most recording offices require a self-addressed stamped envelope large enough to return the documents after recording. Some do not return the documents, but will provide a copy or certified copy if you include the copy or certified copy fees.
Question : What is Fair Market Value?
Answer: Fair Market Value is the price someone is willing to pay to purchase the property in an arm's length transaction between a willing buyer and a willing seller. Most often the transfer tax is based on this value.
Question : What is registered land or Torrens?
Answer: Torrens title is an optional system for registering title to real property and all claims and encumbrances against the property. States with a limited implementation of Torrens include Minnesota, Massachusetts, Colorado, Georgia, Hawaii, New York, North Carolina, Ohio, and Washington. In these states, a Certificate of Title is used in place of a deed. The certificate lists the name of the owner and any mortgage or deed of trust liens, plus any other liens or encumbrances.
Question : What is Assessed Value?
Answer: The Assessed Value is the property value determined for annual property tax purposes. Assessed value is generally a percentage of fair market value and subject to limits on annual increases. In some states, like Virginia, the Assessed Value is used to calculate the transfer tax.
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