I am selling my property, what is a transfer tax and what will it cost me.

The Real Estate Transfer Tax is a tax on the sale, granting, and transfer of real property or an interest in real property.  The statute imposing the tax is found at RSA chapter 78-B and the Department’s administrative rules are at N.H. Code of Admin. Rules, Rev 800.  The tax is imposed on both the buyer and the seller at the rate of $.75 per $100 of the price or consideration for the sale, granting, or transfer.

What types of transactions are taxable? All contractual transfers are subject to tax unless specifically exempt under RSA 78-B:2.  Examples of contractual transfers include:

  • Sales of land and buildings.
  • Transfers between a business entity and its owners.
  • Transfers between related business entities.
  • Transfers from the state of NH, a county, municipality, or other political subdivision of the state. In such circumstances the tax applies only to the buyer.
  • Transfers with the U.S. government or with any of its agencies, instrumentalities or any government corporation that is specifically exempt from state tax per federal law. In such circumstances, the tax only applies to the counterparty, and not to the U.S. government.
  • Sale or granting of a right-of-way or an easement on property.
  • Transfers through foreclosure or by deed in lieu of foreclosure.
  • Leases of real estate for 99 years or longer, inclusive of renewal rights whether exercised or not.
  • Transfers through deed issued as a result of a sheriff’s sale.
  • Transfers of standing timber or exclusive rights to extract soil, gravel, minerals or other like materials from the land of another.
  • Transfers of interests in time-share properties.
  • Transfers of interests in real estate holding companies.
  • IRC § 1031 like-kind exchanges and other real estate for real estate swaps.

On what is the tax based? For most arms length transactions, the tax is based on the actual price or consideration agreed to by the parties.

  • For transactions in which the consideration paid is $4,000 or less, the minimum tax is due ($20 from the buyer and $20 from the seller).
  • For transactions between related parties in which the consideration stated is unsupported, the tax will be assessed on the fair market value of the property.
  • For exchanges involving property or services, the tax is based on fair market value.
  • For transfers of interests in holding companies, the tax is based on the fair market value of the interest attributable to New Hampshire real estate.

What is fair market value? Fair market value is the price the property would command in an arm’s length transaction between a willing buyer and a willing seller.

What are related parties? The term “related parties” encompasses individuals related by blood or law, individuals and the entities they own, and interrelated entities.

What is a real estate holding company? A real estate holding company is a business organization, which is engaged principally in the business of owning, holding, selling, or leasing real estate and which owns real estate or an interest in real estate within the state.

Are there exceptions to the Real Estate Transfer Tax? Yes, among the exceptions are:

  • Non-contractual transfers.
  • Transfers between spouses pursuant to a final decree of divorce or nullity.
  • Filing of a deed or other instrument that correct a deed.
  • Transfers to the state of NH, or a county, a municipality, or other political subdivision of the state of NH.
  • Transfers of cemetery plots.
  • Transfers that occur by devise, by intestate succession and descent, or by the death of a joint tenant.

In the State of New Hampshire there is a transfer tax that gets paid at the time of recording the deed at the county registry of deeds.  The fee is based on the sales price of the property and is equal to $15.00 dollars per $1,000.00 dollars of the that figure.  By statute this amount is to be split by the Buyer and Seller unless negotiated differently in the Purchase and Sales Agreement.

There are time when a transfer tax does not have to be paid.  They include.

Published in: on September 3, 2010 at 12:10 pm  Leave a Comment  

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