Colorado Real Estate Transfer Taxes: An In-Depth Guide (2024 Update)

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By Jon Stubbs Updated March 14, 2024

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Who pays transfer taxes? | When are transfer taxes paid? | Methodology

Colorado's current transfer tax rate is $0.02 per $100. So, for a house worth $549,126 — the median home price in the state — the transfer tax due will be $110. Cities within the state may charge an additional fee on top of the standard rate, which can cause your total dues to increase.

The specifics on who pays the transfer tax in Colorado are sometimes up for negotiation, but usually the buyer is responsible.

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You can't change transfer tax rates. But when you find your agent through Clever, you can get cash back on your purchase that helps soften the blow.

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Let's break down Colorado's real estate transfer taxes and answer some of the most frequently asked questions about the Centennial State's real estate tax policy.

What are real estate transfer taxes?

A real estate transfer tax is a tax that's charged when the title of a property is transferred from one owner to another. Depending on where you are, you could be liable for transfer tax at the state, county and city levels simultaneously. It's even possible to be liable for federal transfer taxes if you acquire a property as a gift, or through an inheritance.

Transfer taxes are separate from property taxes, recording fees, and mortgage recording taxes, and are sometimes called a "stamp tax" or "deed tax," depending on the state. The amount of the transfer tax is based on the property's value, so the more valuable the property being transferred, the higher the amount of transfer tax due. Whether the buyer or the seller is responsible for paying the real estate transfer tax depends on local laws.

How much are real estate transfer taxes in Colorado?

Colorado real estate transfer tax laws vary throughout the state, so buyers should consult a local real estate professional for specific information.

Real estate transfer taxes are an especially tricky issue in Colorado, as the state passed a constitutional amendment in 1992 freezing all real estate transfer taxes and prohibiting any new transfer taxes being imposed. Why is this complicated? Well, to get around the amendment, lawmakers later came up with a statewide "documentary fee" of 0.01% that's paid by the buyer on any property sale above $500. In 2018, this fee was increased to 0.02% per $100 of property value. This tax is paid to the county clerk and recorder in the county where the property changes hands. While it's not called a real estate transfer tax, in essence that's exactly what it is.

The median home value in Colorado is $549,126, so a buyer would owe a documentary fee of $110 if they purchased this average home.

It’s not possible to lower the amount of the documentary fee or avoid paying it, but there are a number of ways to save money on the transaction.

The easiest way is to use a real estate company like Clever — we can partner you with an experienced agent and provide Clever Cash Back after your sale goes through.

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Who pays transfer taxes in Colorado: The buyer or the seller?

Typically, the buyer pays the transfer taxes. But it's not uncommon for the two parties in a sale to work out an alternative arrangement.

Keep in mind that the 0.02% "documentary fee," which is a real estate transfer tax in all but name, is paid by the buyer. And depending on where you buy, you may owe a real estate transfer fee to a homeowner association; this, however, is a private fee, not a government tax. If you're the home buyer, expect to pay these fees unless you discuss otherwise with the seller.

When do you pay transfer taxes in Colorado?

Transfer taxes are paid at the closing of a deal, and in most cases are paid by the seller.

Are Colorado transfer taxes deductible?

No. The buyer is not allowed to deduct transfer taxes and documentary fees paid on the sale of a personal home. The buyer includes these expenses in the cost basis of the property.

The seller can't deduct these payments either. They can, however, classify any real estate transfer tax or documentary fees paid as an expense, which will reduce the overall taxable amount earned from the property sale.

The same applies to any real estate transfer fee paid to a homeowner's association; this can't be deducted, as it's a private fee, and not a tax.

One possible exception to this rule is that if the property being purchased is work-related, i.e. is going to be used as a home office, or is a rental or investment property, then the real estate transfer tax could be written off as a work expense. As always, consult with a tax professional for definitive answers.

How to save on closing costs in Colorado

There are a variety of ways that you could save on closing costs in Colorado. If you bought your home in cash, you could dramatically reduce your closing costs, as many of the fees that make up closing costs are related to financing. Or if you're in a strong negotiating position, you might convince the seller to take on more than half of the closing costs.

One of the best and easiest ways to save on closing costs is to work with a top local agent. Clever Partner Agents are top performers in their markets and bring proven track records and valuable experience to the table.

They can maximize your leverage when it comes time to negotiate the closing costs, and since they offer a full service agent experience for a low, flat fee, the thousands of dollars you could potentially save on commissions can go towards your closing costs. If you're ready to start your home buying journey, contact us today for a free, no-obligation consultation!

Colorado transfer taxes bottom line

Although we’ve provided a brief outline of how Colorado’s documentary fees work, it’s best to have a local expert guide you through the process. An experienced agent, for instance, can help you navigate your local regulations, stay compliant with the law, and ensure that you’re getting the best deal possible from the transaction.

Clever will 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 2.80%! 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 Colorado 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 March 2024.

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