Understanding Erie County’s Transfer Tax: A Quick Guide
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
Are you preparing to sell your Erie County home? You might have questions about the Erie County transfer tax. What is it? How much does it cost? Who pays for it, the buyer or the seller?
Don’t worry. Our quick guide will help explain how the Erie County transfer tax works, giving you information about how much it will impact your bottom line, any possible exemptions you might qualify for, and the tax implications down the road.
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What are transfer taxes?
Real estate transfer taxes are fees charged by state or local governments when property ownership is transferred from one individual to another.
According to the Federal Trade Commission, these taxes are due when the title to a property, essentially the document that confirms your legal ownership, is officially transferred to a new owner.
The amount owed in transfer taxes can vary significantly based on the property’s location, as different states, counties, and cities establish their own rates and regulations for these taxes.
Transfer taxes primarily serve as a means for local and state governments to generate revenue, funding various public services and infrastructure projects.
Who pays for transfer taxes?
Transfer tax liability will vary depending on the municipality. In New York State and Erie County, the seller is responsible for paying these taxes at the end of a real estate transaction. However, there are exemptions that might apply, which we will discuss later.
What are the types of transfer taxes?
Transfer taxes typically vary according to local regulations but can generally be categorized into three types — state, city, and county, depending on the state. Here’s a brief look at how it works in Erie County.
State transfer taxes
For property transfers in New York, a documentary transfer tax of $2.00 is charged for every $500 of home value. However, additional taxes may apply depending on where the transaction takes place, as in Erie County.
County transfer taxes
The Erie County transfer tax rate is $2.50 for every $500 of the consideration. Combined with the New York State transfer tax rate of $2.00, you are looking at a total transfer tax liability of $4.50 per $500 of the home’s sales price if you are the seller.
Other transfer fees
Beyond transfer taxes, there may be additional fees to consider, such as those from a homeowner’s association or other local organizations. Since these can vary widely based on location, consulting a professional is advisable.
If you’re selling your home without a realtor, seeking professional advice can clarify some of the nuances of the process and provide a better understanding of what to expect regarding the pros and cons of selling a house without a realtor.
Are transfer taxes deductible?
Unfortunately, transfer taxes are not eligible for tax deduction.
However, you might be able to lower the amount you pay in capital gains taxes.
Capital gains, defined as the profit obtained from the sale of your home or the financial gain from selling your property, are subject to federal taxation just like profits from the sale of other assets.
According to the IRS, sellers have the option to treat paid transfer taxes as selling costs, allowing them to subtract these from their home’s closing sale price. By doing so, they can diminish the capital gains taxes owed on any profit earned.
Transfer tax exemptions for Erie County
Like any municipality, Erie County offers exemptions on certain property sales. One such exemption is the Senior Citizen Exemption. If you are 62 years of age or older, and have occupied the property for at least one year, you are likely eligible. This exemption will reduce the transfer tax liability to $2.00 per $500 of the property’s sales price. This will only apply to a one to two-family residence.
Estimating your Erie County transfer taxes
Ready to sell your Erie County home? Consider using HomeLight’s Net Proceeds Calculator. This tool will help you estimate closing costs such as transfer taxes, agent fees, and any improvements made to the property, giving you a better idea of what you might walk away with when the transaction is complete.
Additionally, you might want to consider working with an Erie County real estate agent. They can provide valuable insights tailored to your needs. HomeLight can help you connect with a professional today, giving you peace of mind as you sell your home.
Editor’s note: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of Erie County area tax services or attorneys should not be considered endorsements.
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