Published in the Union Leader (3/24/2019)
Q: I’m buying my first home soon, and my broker said that in addition to the price of the home, I’ll need to pay a real estate transfer tax. What is the New Hampshire Real Estate Transfer Tax, and who needs to pay it?
A: Your broker is correct. The Real Estate Transfer Tax applies to most real estate transactions in New Hampshire.
The Real Estate Transfer Tax is imposed on both the buyer and seller of a piece of real property (land) located in New Hampshire. The tax also applies to the sale of buildings, easements, rights-of-way and interests in time-share properties. Transfers of ownership interests in real estate holding companies (companies whose primary business is holding real estate) are also subject to the Real Estate Transfer Tax, even if no deed transferring the property is recorded.
In most cases, the amount of tax is 1.5 percent of the fair market value of the property being transferred, which is usually the purchase price. The buyer and seller may allocate the payment of the tax however they want, but common practice is for each party to pay half.
For example, if the buyer and seller split the tax on the sale of a home for $275,000, both the buyer and seller will pay $2,062.50 in transfer taxes.
The tax is paid to the Registry of Deeds at the time of the recording of the deed, and is evidenced by a stamp added to the deed showing that the tax has been paid. Additionally, both buyer and seller must submit a form to the New Hampshire Department of Revenue Administration within 30 days of paying the tax.
When the property being transferred has a fair market value of less than $2,667, only the minimum tax of $40 must be paid. There are situations where the transfer of property is exempt from the Real Estate Transfer Tax, but these situations are uncommon and specifically defined by statute. They include: gifts of property, the transfer between spouses pursuant to a final divorce decree, the transfer of cemetery plots, and when property is being put into a trust by the grantor or being transferred out of the trust to the beneficiaries at the grantor’s death.
As we enter the peak of home buying season, both buyers and sellers should remember to account for the Real Estate Transfer Tax that applies to the majority of real estate sales and transfers in the state.
Lauren Kilmister can be reached at lauren.kilmister@mclane.com.
Know the Law is a bi-weekly column sponsored by McLane Middleton, professional Association. We invite your questions of business law. Questions and ideas for future columns should be addressed to: McLane Middleton, 900 Elm Street, Manchester, NH 03101 or emailed to knowthelaw@mclane.com. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.