If you are a Nassau County homeowner looking to sell your home, you will need to know how transfer taxes work in both Nassau County and New York.
Transfer taxes are fees that local governments and municipalities levy when a real property (like a home) changes ownership. While they aren’t complicated, there is a bit of nuance to how they work, as they often vary by location, and are an often overlooked part of your closing costs.
Don’t worry. HomeLight has your back. This quick guide on Nassau County transfer taxes will explain how they work, who pays for them, possible exemptions, and more.
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What are transfer taxes?
Real estate transfer taxes are 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 of a property, essentially the document confirming your legal ownership, is officially transferred to a new owner. This can occur through sales, inheritance, or gifting of property.
The amount owed in transfer taxes can vary significantly based on the property’s location, as different states, counties, and cities usually have their own rates and regulations. Transfer taxes primarily serve as a revenue source for local and state governments, funding various public services and infrastructure projects.
Who pays for transfer taxes?
In New York and Nassau County, the seller is usually responsible for paying for transfer taxes. However, there is one exception. While the buyer is initially not responsible for paying transfer taxes, the terms of the sales agreement can allow for it.
Additionally, if the seller has neglected to pay any required transfer taxes, the buyer is on the hook. In this case, both the buyer and the seller are jointly responsible for ensuring the tax is paid. However, in this situation, the buyer can seek legal remedy against the seller.
That kind of situation isn’t common, but it’s a good example of when you might want to consult a real estate attorney.
What are the types of transfer taxes?
Transfer taxes typically differ based on local regulations but can generally be categorized into three types: state, city, and county. Here’s a brief look at how this works in Nassau County.
State transfer taxes
According to the New York State Department of Taxation and Finance, transfer taxes are levied at a rate of $2.00 for every $500 of consideration. The state also has a “mansion tax,” which is an additional tax of 1% of the sale price applicable to residences with a value of $1 million or higher.
County transfer taxes
Nassau County’s transfer tax rate is set at $4.00 for every $1,000 of the property’s value (or $2.00 for every $500). Nassau County also has a transfer tax fee of $5.00.
Other transfer fees
Beyond transfer taxes, there may be additional fees to consider, such as those from a homeowner’s association or local neighborhood organization. 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 clearer picture of what to expect regarding the pros and cons of selling a house without a realtor.
Are transfer taxes deductible?
Transfer taxes are, unfortunately, not eligible for tax deduction.
However, you can 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 lessen the capital gains taxes owed on any profit earned.
Nassau County transfer tax exemptions
Depending on your circumstances, you may not owe transfer taxes on your home sale, but such exemptions will vary depending on your state.
In New York City, for example, there are several possible exemptions, though the property transfer still must be reported on a Real Property Transfer Tax Return. According to the New York City Department of Finance, this can include (but is not limited to) a deed, instrument, or transaction:
- “to or from a non-profit organization formed and operated exclusively for religious, charitable, or educational purposes, or for the prevention of cruelty to children or animals;
- “given by an executor outlined within the terms of a will. However, a deed given by an executor in connection with a sale of an interest in real property is taxable”;
- “given solely as security for a debt or a deed/instrument given solely to return such security”;
These are just some examples. Be sure to consult a real estate attorney or tax professional if you are unsure about what you may or may not owe when the sale is complete.
Estimating transfer taxes for Nassau County home sale
Before you start the process of selling your Nassau County home, it’s probably a good idea to get an estimate of what you’ll walk away with when all is said and done.
HomeLight’s Net Proceeds Calculator is a great tool to have in your back pocket. It can help you estimate your closing costs, transfer taxes, agent fees, and more, giving you a good idea of what you might earn from selling your home.
For even more help, you might want the help of a Nassau County real estate professional. HomeLight can connect you with a trusted real estate agent today, giving you the tools and the peace of mind you need to sell your home with confidence and ease.
Editor’s note: This post is intended for educational purposes only and does not serve as legal or financial advice. References to Nassau County area tax services or attorneys should not be interpreted as endorsements.
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