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The Divorce Encyclopedia
Realty Transfer Tax

Term Definition Realty Transfer Tax - a state or local levy imposed in some jurisdictions upon the sale or transfer of real estate.
Application in Divorce Normally, when real property -- a house and the land under it -- is sold, the buyer pays a realty transfer tax and tax stamps, which certify the payment, are affixed to the new deed he or she receives at settlement. Each time a property is sold, each buyer receives a new deed, and it is recorded in the county courthouse.

In a divorce, however, real estate transfers between spouses are often exempt from this tax provided an affidavit of consideration has been filed identifying it as marital property received in a divorce action.

This affidavit is required in some states to avoid a realty transfer tax when one person acquires individual title to real property formerly owned as a couple. The rationale behind the exemption is that the couple already paid the tax and the transfer is not a sale but a distribution of marital property.

The realty transfer tax, which is usually a percentage of the purchase price, varies from one jurisdiction to another. Given the high prices of even modest homes, however, this exemption can save a divorcing couple hundreds of dollars.

It is perfectly legal to write any amount on a deed as the purchase price. The tax stamps, however, must reflect the actual purchase price.

See Affidavit of Consideration.

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