Real Estate Transfer Taxes
Definition
A transfer tax is a tax imposed on the transfer of ownership of real estate.
Example
New York State transfer tax (outside NYC) is $2 per $500 (0.4%). Oregon has no state real estate transfer tax, but some localities may impose transfer taxes.
Exam Tip
Know whether a state has a transfer tax and, if so, the general rate or calculation method. Be aware that some localities may also impose their own transfer taxes in addition to state taxes. Pay attention to whether the buyer or the seller typically pays the tax in that jurisdiction.
Related Valuation Terms
Property Tax Exemptions and Relief Programs
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
Depreciation of Investment Property
Depreciation is an accounting method of allocating the cost of an asset over its useful life, allowing investors to deduct a portion of the asset's cost each year.
Property Tax Assessment Limits
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
Homestead Portability
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
Income Approach
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
Highest and Best Use
Highest and best use is an appraisal concept that identifies the most profitable, legally permitted, physically possible, and financially feasible use of a property. It is the foundation of all property valuation.
Frequently Asked Questions
Test Your Valuation Knowledge
Practice with exam-style questions to make sure you can apply Real Estate Transfer Taxes and other valuation concepts.