A buyer and seller in Lewisburg, West Virginia execute a purchase agreement for a rural property. The agreement is silent on the allocation of the West Virginia real estate excise tax (transfer tax). The transaction closes at a sale price of $400,000. The county has adopted the additional county transfer tax. At closing, the settlement agent asks who is responsible for the transfer tax. Under West Virginia law and standard practice, which party is responsible for paying the transfer tax, and what is the total amount due?
Correct Answer
D) The seller pays the transfer tax; total amount is $1,320
Under West Virginia law, the real estate excise tax (transfer tax) is imposed on the seller as the party transferring the property. The state rate is $1.10 per $500 of consideration, and counties may impose an additional $0.55 per $500. With both state and county rates combined, the total rate is $1.65 per $500. For a $400,000 sale: $400,000 ÷ $500 = 800 units × $1.65 = $1,320. The seller is responsible for this amount when the contract is silent on the allocation, consistent with standard West Virginia practice.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
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