A closing is scheduled for a $625,500 residential property in Springfield, Massachusetts. The purchase price does not divide evenly by $1,000, resulting in a fractional unit. How should the Massachusetts deed excise tax be calculated on the $500 fraction remaining after dividing by $1,000?
Correct Answer
A) The $500 fraction is rounded up to a full $1,000 unit and taxed at the full rate of $4.56, just like a complete $1,000 unit.
Under MGL Chapter 64D, the deed excise tax rate of $4.56 applies to each $1,000 'or fraction thereof' of the consideration. The phrase 'or fraction thereof' means that any amount remaining after dividing by $1,000 — no matter how small — is rounded up to a full $1,000 unit and taxed at the full $4.56 rate. For a $625,500 purchase: 625 full units × $4.56 = $2,850.00, plus 1 additional unit for the $500 fraction × $4.56 = $4.56, for a total of $2,854.56.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A transfer tax is a tax imposed on the transfer of ownership of real estate.
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
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