Sarah is purchasing a home in Sioux Falls, South Dakota. At closing, her settlement statement includes a line item for state real estate transfer tax. Her agent, Tom, should advise Sarah that:
Correct Answer
A) South Dakota does not impose a real estate transfer tax, so this line item should not appear.
South Dakota does not impose a real estate transfer tax (deed tax) on property transactions. Any line item for state transfer tax on a South Dakota closing statement is incorrect and should be removed. This is a key distinction from many other states that do impose such a tax, and it is a frequently tested topic on the SD state exam.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
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