A purchase and sale agreement in Maine has been fully executed. The seller is a Massachusetts resident who owns the property as a rental investment. At closing, the buyer's attorney calculates the real estate transfer tax. The property sold for $440,000. Under Maine's Real Estate Transfer Tax, what is the total transfer tax owed, and how is it split between the parties?
Correct Answer
D) Total tax is $1,936; each party pays $968
Maine's Real Estate Transfer Tax (36 M.R.S. §§ 4641–4641-N) is assessed at $2.20 per $500 of value or fraction thereof. For a $440,000 sale: $440,000 ÷ $500 = 880 units × $2.20 = $1,936 total. The tax is split equally between buyer and seller, so each pays $968. Maine's equal split is a key distinction — many candidates assume the seller pays the entire transfer tax.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
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