If you're buying or selling property, one thing you need to know about is your state's transfer tax. Here's everything you need to know about Oklahoma transfer (documentary stamp) tax — from how much it is to who pays and more.
When you're buying or selling a house, one of the expenses you may have to budget for is your state's real estate transfer tax. Transfer taxes can vary based on your region, state, and county. Here's everything property owners, buyers, and sellers need to know about Oklahoma real estate transfer tax, also known as the documentary stamp tax.
What Are Real Estate Transfer Taxes?
Real estate transfer taxes are taxes charged when property changes hands. It's a percentage of either the sale value or assessed value of your property, depending on what state you're in. Thirty-five states and the District of Columbia have transfer taxes.
Real estate transfer taxes are also known as real estate conveyance taxes, mortgage transfer taxes, documentary stamp taxes, and property transfer taxes. In Oklahoma, transfer taxes are called documentary stamps or doc stamps. Transfer taxes are for filing purposes and help fund land developments and HUD properties and programs.
Transfer taxes vary on a regional, state, and local level, so it's important for buyers and sellers to work with an experienced real estate agent to ensure they completely understand the transfer tax process before buying or selling property.
If you're buying property, selling property, or have inherited property, transfer taxes in your state and county are something you need to be familiar with. Speak to a Clever Partner 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.
Who Pays Transfer Taxes in Oklahoma: the Buyer or the Seller?
Who pays the transfer tax varies state to state and region to region. In Oklahoma, the transfer tax is customarily paid by the seller. However, Oklahoma law allows either the buyer or seller to pay the tax, so the parties can come to their own agreement during contract negotiations.
When you list your property, your real estate agent should estimate the amount of documentary stamps that will be part of the closing costs, based on the home's list price.
How Much Are Transfer Taxes in Oklahoma?
In Oklahoma, the documentary stamps are $0.75 per $500 (or 0.15%) of the sales price of the property. For median value homes in Oklahoma worth $123,700, the transfer tax would be $185.55.
The documentary stamps are affixed to the deed when it is recorded. At the time of recording, the county clerk must be presented with an affidavit, contract, closing statement, or other evidence of purchase price, to verify the amount of documentary stamps needed.
Can You Deduct Transfer Taxes?
Yes and no.
Unfortunately, documentary stamps and transfer taxes are not tax-deductible for the buyer or the seller, unless the property is an investment property. However, property owners can include transfer taxes in the “cost basis” of the property (the amount you paid to acquire it).
In Oklahoma, the seller generally pays the documentary stamp tax. In this situation, sellers can deduct the tax from the effective sale price of the home when computing the capital gain or loss. Raising the cost basis of the home decreases the capital gain on the sale. This will help reduce the seller's tax burden.
There is an exemption to the general rule that transfer taxes can't be deducted. If the property at issue is a rental home or real estate investment, transfer taxes can be deducted as a work expense.
In addition to being familiar with the Oklahoma state documentary tax scheme, buyers and sellers need to understand the overall state and local taxation scheme where their property is located.
A Clever Partner Agent can help you navigate all the fees and taxes you will have to pay when you buy or sell property. They can also let you know about negotiating who will pay the tax, the buyer or seller.
All Partner Agents are up-to-date on the current trends of the real estate market and are also familiar with all of the legal and tax implications of home sales. They are top negotiators from major companies like Keller Williams, Century 21, and RE/MAX. They are also full-service, so you won't sacrifice any benefits while saving money.