Who pays transfer taxes? | When are transfer taxes paid? | Methodology
Minnesota's current transfer tax rate is $1.65 per $500. So, for a house worth $323,034 — the median home price in the state — the transfer tax due will be $1,066. Counties 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 Minnesota 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 Minnesota average of 3.05%.
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 Minnesota: The buyer or the seller?
In Minnesota, transfer taxes are generally referred to as deed taxes. It is the party selling the property that foots the deed tax in the state.
The money that is collected in the form of transfer tax is directed to the county treasurer, and 97% of it goes into the state general fund. The rest of the money is used by the county for administrative expenses.
When do you pay transfer taxes in Minnesota?
Sellers are required to pay deed taxes at the time of closing.
How Much Are Transfer Taxes in Minnesota?
The deed tax rate in Minnesota is 0.33% of the net consideration, i.e. the price that was paid for the property in question. So for the average home that costs $323,034, you would pay $1,066 in transfer taxes.
There is an additional tax that sellers in the counties of Hennepin and Ramsey have to pay in the form of an Environmental Response Fund (ERF) tax. The ERF tax has been set at 0.01% of the selling price. Selling a house worth $200,000 in Hennepin or Ramsey will incur $20 in ERF tax.
Can You Deduct Transfer Taxes?
Transfer taxes paid to the local county cannot be deducted from your income tax filing. What you can do as a seller in Minnesota is deduct the amount paid in transfer taxes from the effective selling price of the property.
The effective sale price becomes a consideration when computing capital gains tax. Capital gain is basically the difference between the original price of the home and its selling price. Since transfer taxes can be deducted from the capital gain, it is one of the ways sellers in Minnesota can reduce their tax exposure.
Other Considerations
Real estate transfer taxes are sorted out in Minnesota at the time of closing. There are ways in which you can qualify for a deed tax exemption, including through mortgages, leases, and mortgage dissolution decrees. Consult a local real estate agent to find out if you qualify for an exemption.
Both buyers and sellers can benefit from working with a local real estate agent while trying to make sense of the regulations associated with transfer taxes. Agents will be able to provide guidance on how to go about computing how much you owe, what the process is to make payments, and if there is a way you can be exempted from having to pay.
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 3.05%! 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 Minnesota 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.
