Who pays transfer taxes? | When are transfer taxes paid? | Methodology
Massachusetts's current transfer tax rate is $2.28 per $500. So, for a house worth $596,410 — the median home price in the state — the transfer tax due will be $2,743. In Massachusetts transfer taxes may also be called deed stamps or excise taxes.
The specifics on who pays the transfer tax in Massachusetts 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 Massachusetts average of 3.10%.
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 Massachusetts: The buyer or the seller?
In Massachusetts, the responsibility for the tax falls on the seller. Remember, that when you buy a property everything is up for negotiation and who pays the transfer tax or how it's split can be arranged by the buyer and the seller.
How Much Are Transfer Taxes in Massachusetts?
The amount of the transfer tax depends on how much the property sells for and its location. The basic transfer tax rate in Massachusetts is $2.28 per $500 of property value.
However, some counties charge additional transfer taxes. For example, in Barnstable County the combined state and county excise rate is $2.85 per $500.
To pay the tax, you purchase excise stamps from the Registry of Deeds in the county where the property is sold. You then attach the stamps to the deed or certificate of sale or transfer.
If a taxpayer does not put enough excise stamps on a deed to cover the transaction, the state can assess the additional tax within three years. There will also be an additional interest charge.
If the taxpayer does not put any excise stamps on a deed at all, the Department of Revenue can assess the tax and penalties at any time.
When do you pay transfer taxes in Massachusetts?
Transfer taxes are paid at the closing of a deal, and in most cases are paid by the seller.
Can You Deduct Transfer Taxes?
Transfer taxes are not tax deductible for either the buyer or the seller. However, they can save you money in other ways.
Transfer taxes are considered in the cost basis of the property, which is used to calculate the final capital gain on the sale. Raising the cost basis of the home decreases the total gain on sale. That means you will pay less in total taxes you pay on the gain.
For example, if you bought a house for $300,000, and sold it later for $600,000, your capital gain would be about $300,000. If you file your taxes as a single person, you must pay taxes on any capital gains above $250,000 (the limit is $500,000 for joint returns).
As a single filer you would pay a capital gains tax on the $50,000. But if you paid $3,000 in transfer taxes, you can subtract this from what you made in profit. You will pay the capital gains tax on only $47,000, saving you money on what you owe.
Speak to a local real estate agent about other tax savings for buyers and sellers. They will also be able to guide you to a host of government programs and grants that can cut down on your closing costs.
Other Tax Considerations
The Massachusetts real estate tax stamps are mandatory payments. The cost of the tax needs to be factored into the total cost of the purchase property. Since it is negotiable, both the buyer and seller should familiarize themselves with it.
One way to do this is to talk to a local realtor. A Clever Partner Agent can help you navigate all the fees and taxes you will have to pay whether you are buying a home or selling one. They can also let you know about negotiating who will pay the tax, the buyer or seller.
What’s more, our agents charge only a 1.5% listing fee compared to the state average of 3.10%! 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 Massachusetts 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.
