In real estate, a Documentary Transfer Tax is a tax imposed on the transfer of real property, authorized by state law and administered by counties or local jurisdictions. When a property is sold or otherwise conveyed, the tax is calculated based on the property’s sale price or the value of the consideration and must be paid as part of the recording process.
Proof of payment is typically shown by a notation on the face of the deed or by a separate document filed with the deed at the time it is recorded. The responsibility for paying the documentary transfer tax varies by state or local custom and may fall on the buyer, the seller, or be shared. This tax is a common source of revenue for local governments and is required to make the transfer of title a matter of public record.
