Each municipality in Massachusetts levies a real estate property tax on residential property within its borders, and this is often a primary producer of revenue in that municipality. The local board of assessors sets the tax rate. Some homeowners may be surprised that when they sell their homes, they must pay a tax on selling the property. This tax may be called a transfer tax, deed stamps, stamp tax, conveyance tax, or an excise tax. It is paid at closing, and the closing attorney is supposed to make sure that all of the real estate taxes have been paid and properly allocated. Lenders may require an escrow account for the payment of these taxes. The Boston real estate lawyers at Pulgini & Norton are familiar with the tax issues surrounding property transactions and can help you make sure that you comply with the applicable rules.
Transfer Tax Rules in MassachusettsIn most Massachusetts counties, the transfer tax is $4.56 per thousand, although it is higher in certain counties. The charge appears in the HUD-1 Settlement Statement at line 1203. The statement is usually available on the day before closing, and you and your attorney can review it beforehand. You will have to pay the transfer tax at the Registry of Deeds in order to have the deed recorded and the sale finalized.
The transfer tax is required by Massachusetts General Laws chapter 64D, section 1, which provides that the tax should be levied at any time that real estate is granted, assigned, transferred, or otherwise conveyed to purchasers, and the consideration involved in the transaction is more than $100. This means that in gift transfers and transactions involving $100 or less, the transfer tax is not charged, but recording fees are. The tax is not limited, however, to deeds or instruments that are going to be recorded. The tax must be paid by the person who makes the deed or transfer instrument, or for whose benefit the instrument is made or signed.
Payment of the tax is shown by excise stamps that are affixed to the transfer instrument or deed in the Registry of Deeds in the municipality where the property is located. The stamp should be bought at the same Registry of Deeds. If the transfer involves property that is located in more than one jurisdiction, only one deed is used to record the transfer, and the purchase price is not allocated based on the county, you will need to purchase stamps in the jurisdiction of the first recording. In other jurisdictions where a duplicate deed is filed, the deed should note that it is a duplicate original of a recorded deed to which deeds excise stamps were affixed.
Discuss a Real Estate Transaction with a Boston LawyerWhen you sell a home in Massachusetts, you will need to pay a transfer tax, record the deed, handle any outstanding title issues discovered, and take care of countless other details. In most cases, it is wise to retain an experienced Boston real estate attorney during a home purchase or sale. At Pulgini & Norton, we advise and represent clients in Newton, Malden, New Bedford, and other cities in Massachusetts. Call us at 781-843-2200 or contact us via our online form for a free consultation.