Who pays transfer taxes? | When are transfer taxes paid? | Methodology
Maine's current transfer tax rate is $2.20 for $500. So, for a house worth $382,580 — the median home price in the state — the transfer tax due will be $842. It doesn’t stop there, however, as 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 Maine are sometimes up for negotiation, but usually the buyer and seller split the cost.
Who pays transfer taxes in Maine: The buyer or the seller?
In Maine, usually, the buyer and seller split the cost for paying the transfer tax.
There are 21 exemptions to the transfer tax laws as outlined in Chapter 711-A: Real Estate Transfers document. For example, real estate transfer taxes do not apply when a property is transferred between family members. In Maine, spouses, parents, children, grandparents, and grandchildren can transfer ownership to and from each other without having to pay a transfer tax.
Real estate that is transferred between spouses in divorce proceedings is also not taxed.
Are you wondering if you meet any of the other 19 exemptions listed in the document? You can look at the tax form on the State of Maine’s website, but unless you are an accountant or lawyer, it may not make much sense to you. Another professional that knows about the idiosyncrasies regarding local tax laws is your local real estate agent. Talk with your agent to see if you could be exempt from this tax.
How Much Are Transfer Taxes in Maine?
The current rate for the Maine transfer tax is $2.20 per every $500 of the sale. This rate is split evenly between the seller and the purchaser. As such, each party is required to pay $1.10 per every $500 or $2.20 for every $1,000 of the price of the home.
For a $382,580 home, the buyer and seller in Maine will both pay $842 for the state transfer tax.
Can You Deduct Transfer Taxes?
While property taxes can help relieve your tax bill at the end of the year, transfer taxes are not tax deductible.
If you are the seller, you can include the transfer tax in the "cost basis" of the property.
This is how it works:
You sell a property and 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.
You might not be charged capital gains tax if you lived in the house that you sold more than two years.
When do you pay transfer taxes in Maine?
Transfer taxes are paid at the closing of a deal, and in most cases are paid by the seller. So, when you're filing your taxes, sellers should be sure to deduct the transfer tax from their capital gain.
This is especially important because capital gains tax is paid to the federal government and the transfer tax is paid to the state government. So, chances are, you'll be paying both these taxes separately, and at different times.
Other Considerations
Since there are quite a few procedures and laws to follow, especially with local areas having additional tax requirements, it's a good idea to hire an expert local real estate agent to help you out.
These experts do more than just list your homes online — they take care of the paperwork, negotiate on your behalf, and ensure that you get a great price for your home.
We’ll 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 2.83%! 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 Maine 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 January 2024.
