Knowing how real estate transfer taxes work is essential when selling your home in Westchester County. Transfer taxes are fees levied by local or state authorities when property ownership changes hands. The rates can differ significantly based on location and impact your overall costs.
This guide will explain how transfer taxes work in Westchester County, breaking down what you can expect to pay and who is responsible for the Westchester County transfer tax. Additionally, we will highlight possible exemptions for which you may qualify.
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.
What are transfer taxes?
State or local governments levy real estate transfer taxes 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 passed to a new owner.
The amount you owe in transfer taxes can vary significantly based on the property’s location.
Different states, counties, and cities can establish their own rates and regulations for these taxes. Transfer taxes primarily serve as a revenue source for local and state governments, supporting various public services and infrastructure projects.
Who pays for transfer taxes?
In Westchester County, generally, the seller is responsible for paying transfer taxes in New York, although this is always mandatory. In New York state, the buyer or the seller can be on the hook for transfer taxes, provided it is specified in the sales agreement. Otherwise, it will fall to the seller.
What are the types of transfer taxes?
Transfer taxes typically vary based on local regulations but can generally be categorized into three types: state, city, and county, depending on the state. Here’s a brief overview of how it works in Westchester County.
State transfer taxes
In New York, a documentary transfer tax of $2.00 for every $500 of home value is applied. However, additional taxes may apply depending on your location in New York.
County transfer taxes
In Westchester County, the county transfer tax rate is $2.00 for every $500.
Other transfer fees
Besides transfer taxes, there may be additional fees to consider, such as those from a homeowner’s association or other local neighborhood 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 might assist with the finer details of the process and provide a clearer understanding of what to expect regarding the pros and cons of selling a house without a realtor.
Are transfer taxes deductible?
Transfer taxes are not deductible on your income tax return, but they may still provide some tax advantages when selling your home. While you can’t write them off as a direct deduction, you might be able to reduce your capital gains tax liability. Capital gains refer to the profit made from selling a home or other assets, and they are subject to federal taxation.
The IRS allows sellers to classify transfer taxes as selling costs, which can be deducted from the home’s final sale price when calculating capital gains. Reducing the reported profit from the sale could lower the capital gains tax owed. Homeowners planning to sell should consult a tax professional to understand how this applies to their situation.
Transfer tax exemptions
Some sellers in Westchester County might be eligible for transfer tax exemptions. Here are a few examples:
- Transactions involving the United Nations or any international organization of which the United States is a member.
- Transfers to or from non-profit organizations established for religious, charitable, or educational purposes, or for preventing cruelty to children or animals.
- Transfers to any government entity are exempt from tax payment.
- Transfers made solely as security for a debt or a deed/instrument given solely to return such security.
- Transfers from an agent, dummy, straw man, or conduit to their principal, or vice versa.
- Transfers made by an executor as specified in a will, although a deed given by an executor in connection with a sale of real property interest is taxable.
- Transfers that merely change the identity or form of ownership or organization, provided the beneficial ownership remains unchanged.
Estimating Transfer Taxes for Your Home Sale
To accurately estimate the potential proceeds from selling your Westchester County home, consider using HomeLight’s Net Proceeds Calculator. This tool accounts for essential costs such as closing expenses, transfer taxes, agent fees, and any updates you’ve made to the property, providing a precise estimate of what you might earn from the sale.
Additionally, collaborating with a top real estate agent early in the process can offer valuable insights into your situation. HomeLight can connect you with a top Westchester County agent today, giving you peace of mind during a difficult process.
Editor’s note: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of Westchester County area tax services or attorneys should not be considered endorsements.
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