Who pays transfer taxes? | When are transfer taxes paid? | Methodology
Arkansas's current transfer tax rate is $3.30 per $1,000. So, for a house worth $203,305 — the median home price in the state — the transfer tax due will be $656.
Called a documentary stamp tax in Arkansas, the transfer tax is collected only at the state level, but there are "nominal recording fees" at the city and county levels.
The specifics on who pays the documentary stamp tax in Arkansas are sometimes up for negotiation, but usually the seller is responsible.
Clever Real Estate can help you cut costs here — our concierge team will partner you with an experienced agent who can help you negotiate a good deal with your buyer on transfer taxes. You'll save big by paying only 1.5% in commission, which is much less than the Arkansas average of 3.22%.
You can't change transfer tax rates. But, an experienced Clever Real Estate agent can help you win the negotiation battle so you aren't stuck paying all of the transfer taxes on your own.
When you choose Clever, you'll work with a full-service realtor with transfer tax expertise in your local market.
Clever's service is totally free, with zero obligation — you can walk away at any time.
Who pays transfer taxes in Arkansas: The buyer or the seller?
The state of Arkansas does not specify whether the buyer or seller owes the tax, but traditionally the seller is responsible. However, taxes and fees are negotiable expenses during the closing process that well-prepared buyers and sellers should expect to discuss.
Although common in other states, there does not seem to be an obvious exemption to this tax in the state of Arkansas. Some states allow the transfer of ownership between family members without having to pay the transfer tax, but it is not clear whether this is the case for Arkansas residents. If you're attempting to transfer property within the family, consider reaching out to a local government office to see if an exemption would be possible.
How Much Are Transfer Taxes in Arkansas?
The current rate for the Arkansas real property transfer tax is $3.30 per $1,000.
For a $203,305 home, the buyer or seller in Arkansas will pay $656 for the real property transfer tax.
When do you pay transfer taxes in Arkansas?
Transfer taxes are paid at the closing of a deal, and in most cases are paid by the seller.
Can You Deduct Transfer Taxes?
While property taxes may help relieve your tax bill at the end of the year, the state and county real property conveyance taxes are not tax deductible. The IRS does not consider transfer tax a "sales tax."
If you are the seller, you can include the transfer tax in the "cost basis" of the property.
This is how it works:
Hopefully, when you sell a property, you will make money on the sale. You may be charged a capital gains tax on the amount of money that you made. The amount you spent on the transfer tax can be subtracted from your profit so that your capital gains tax bill can be reduced.
While this may appear that the federal government is giving you a way to reduce your taxes by allowing for this deduction in your capital gains tax bill, it is interesting to note that this reduction isn't even necessary if you owned the home for more than two years, at which point capital gains taxes are dramatically reduced.
Other Considerations
Very few people like to read and think about taxes. Since most people go through a house closing only a few times in their lives, they don't find it necessary to memorize the details of the real property transfer taxes.
When learning about complicated issues like taxes and closing costs, sometimes it is easier to have a professional sit across the kitchen table from you to explain things. That's why you should reach out to a Clever Partner Agent in Arkansas to talk you through this closing process.
Whether you are buying or selling a home, your real estate agent will talk you through the process and make sure you understand all the different fees and taxes that you will be charged at closing.
Clever can partner you with a local real estate agent who knows how to deal with the state’s tax and helps negotiate a deal in your favor. What’s more, our agents charge only a 1.5% listing fee compared to the state average of 3.22%! The money you'll save can more than offset the cost of the transfer taxes.
» SAVE: Learn more about how a Clever agent can help you navigate Arkansas transfer taxes
Methodology
- Transfer tax amounts are based on government website information as of February 2024.
- We gathered our listing commission rate data from a December 2023 survey of 630 of our partner agents.
- Home values, list prices, and sale prices are based on Zillow data as of February 2024.
