Understanding Georgia’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.
Selling your home in Georgia can be complicated. The time it takes to make a sale, combined with the number of fees and costs to consider can be overwhelming.
One fee that you might not have considered is the real estate transfer tax. Transfer taxes are fees imposed by the state, county, or city when property changes hands. They are typically calculated based on the property’s sale price or its assessed value, though it will depend on where you are location.
This guide will offer a quick look at how transfer taxes work in Georgia, giving you an idea of what you might be expected to pay in the Peach State.
Connect with a Top Agent to Help Maximize Value
Even rockstar agents can’t make your tax liability disappear, but HomeLight data shows that the top 5% of agents across the U.S. help clients sell their home for as much as 10% more than the average real estate agent, helping offset the tax bill.
Disclaimer: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of Georgia area tax services or attorneys should not be considered endorsements.
What are transfer taxes?
Real estate transfer taxes are imposed by state, county, or city governments when the ownership of a property is transferred from one individual to another. Defined by the Federal Trade Commission as state or local taxes payable when title to property passes from one owner to another, these taxes are typically based on the property’s sale price or assessed value. The actual amount owed can vary significantly depending on where the property is located, as each jurisdiction has its own rules and rates.
The primary purpose of transfer taxes is to generate revenue for local governments. This revenue supports various public services and infrastructure projects within the community.
Who pays for transfer taxes?
In Georgia, the seller is liable for the state’s transfer tax (also referred to as an excise tax.) However, this is not mandatory and it is not uncommon for the seller and the buyer to come to terms in the purchase agreement to pass the responsibility to the buyer.
What are the types of transfer taxes?
Transfer taxes will typically vary based on local guidelines but can generally be broken down into three categories — state, city, and county, depending on the state. Not every state will have all three. Here’s a quick look at how it works in Georgia.
State transfer taxes
The Peach State’s transfer tax is based upon the price a property sells for and is levied at a rate of $1 for the $1,000 (or fractional part of $1,000) and then a rate of 10 cents for each additional $100 (or fractional part of $100) thereafter.
For example, if your property sold for $400,000, you would be on the hook for $400.
Other transfer fees
In addition to transfer taxes, there are possible fees to consider, such as from a homeowner’s association or another local neighborhood organization. Again, as these can vary heavily based on location, it’s important to consult a professional.
In Georgia, you should also be aware of intangible taxes. Intangible taxes apply to loans maturing in over three years, charged at $3.00 per $1,000 borrowed. For instance, a loan of $150,000 incurs a $450 tax. Credit unions and government agencies are exempt from these taxes.
If you’re selling your home for sale by owner, consulting a professional might help with some of the finer points of the process and give you a better idea of what you can expect.
Are transfer taxes deductible?
Unfortunately, transfer taxes are not deductible on your income tax returns. However, they can indirectly reduce the amount you owe in capital gains taxes. Capital gains are the profits from the sale of assets like your home and are taxable at the federal level.
According to the IRS, sellers can classify paid transfer taxes as selling costs. This classification allows sellers to deduct these costs from their home’s final sale price, reducing the taxable profit and thus the capital gains taxes owed.
A tax professional or a top real estate agent can better assist with this part of the process, so it’s important to consult an expert if you have questions.
Transfer tax exemptions
In Georgia, some sellers may be eligible for exemptions from state transfer taxes, depending on the specifics of the transaction.
- Transactions from an agent to principal or nominee to principal
- Cemetery deeds
- Chapter 11 bankruptcy situations
- Transfers from a company to an individual or within corporate structures, including mergers
- Deeds confirming title already vested, in lieu of foreclosure, of correction, of gift, or based on divorce
- Estate deeds and first transferees after foreclosure
- Transfers involving government or nonprofit public corporations
- Individual to company transfers and joint tenant divisions
- Partition deeds
- Property returned after a FiFa (fieri facias, a type of legal seizure)
- Acquisitions for public roads
- Sheriff’s deed of redemption
- Year’s support orders
Estimating transfer taxes for your home sale
To estimate the transfer taxes for your home sale in Georgia, consider using HomeLight’s Net Proceeds Calculator. This tool provides a quick approximation of what you might earn from selling your home by accounting for closing costs, including transfer taxes, agent fees, and any necessary renovations. It offers a comprehensive view of your potential financial outcome, helping you plan effectively for your sale.
Often, whether these taxes are paid by the buyer or the seller can be negotiated based on the current market conditions. Engaging with an experienced agent from the beginning ensures you have the expertise needed to navigate these financial aspects smoothly.
For a more detailed and accurate assessment of your transfer taxes and other closing expenses, it’s advisable to consult with a top real estate agent. A skilled agent can guide you through the complexities of local real estate transactions, including the negotiation of transfer taxes.
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