Susan is transferring her Brookline investment property valued at $900,000 to her adult son for $1 as a gift deed. The Registry of Deeds clerk informs Susan that the deed excise tax will be calculated on the full $900,000 fair market value, not on the $1 stated consideration. Which of the following best explains why the Registry of Deeds takes this position?
Correct Answer
D) Massachusetts law requires that all deeds be taxed on the higher of the stated consideration or the fair market value to prevent tax avoidance on nominal or below-market transfers.
Under MGL Chapter 64D and related Massachusetts Department of Revenue guidance, when the consideration stated in a deed is nominal or clearly below fair market value (such as a $1 gift deed), the deed excise tax is assessed on the greater of the stated consideration or the fair market value of the property. This rule exists specifically to prevent tax avoidance through artificially low stated prices on deeds. The Registry of Deeds is correct to apply the $900,000 fair market value as the tax base.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Valuation Question
Background Knowledge for Valuation
Real World Application in Valuation
Common Mistakes to Avoid on Valuation Questions
Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
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.
More Valuation Questions
In Utah, property taxes are collected by which governmental entity?
In Utah, how is a primary residence assessed for property tax purposes under the residential exemption?
Which of the following best describes how Utah's rapid population growth, driven partly by Silicon Slopes tech expansion, has affected housing affordability?
When appraising a property in Utah's Wasatch Front, which environmental hazard would an appraiser need to consider that is less common in most other states?
The rapid growth of the 'Silicon Slopes' tech corridor in Utah has most directly affected real estate in which area?
- → The income approach to appraisal is most commonly used for which type of property?
- → Which formula correctly calculates the capitalization rate?
- → External obsolescence in Oklahoma:
- → The sales comparison approach to appraisal is most appropriate for which type of property?
- → Which of the following correctly lists the three types of depreciation recognized in real estate appraisal?
- → The sales comparison approach to appraisal is most commonly used for which type of property?
- → Which four tests must a use satisfy to qualify as the highest and best use of a property?
- → Three depreciation:
- → Cap rate:
- → Which formula best represents the cost approach to appraisal?
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Financing
12% of exam
Related Articles
Appraisal & Valuation for the Real Estate Exam (2026): CMA, Comps, Cap Rate + Examples
Learn the three approaches to value, CMA basics, and cap rate questions with examples and practice.
How to Study Real Estate Valuation Questions Without Mixing Price and Value
A topic that feels clear in notes can still fail in practice if recall has not caught up with recognition. If you are searching for study real estate...
How to Study Real Estate Finance Topics Without Letting Loan and Valuation Terms Blur Together
Use a cleaner study system for real estate finance topics so loan terms, valuation language, and formulas stop blending together.