Documentary Transfer Tax

Definition: A documentary transfer tax is a tax collected by the county or the city every time a real property exchanges hands or is sold in the public records. The documentary transfer tax is a fee based on a percentage of the sales price. In California, counties charge 55 cents per 500 dollars of sales price of transfer tax. This fee is sometimes equated to $1.10 per thousand, but it is really 55 cents per $500.

The seller or the buyer can pay the documentary transfer tax, but each county typically has its own local custom as to which party pays for this tax.

The documentary transfer tax is also a way to determine the sales price of a property, since each deed has the tax written on the face of the deed. Absent any other information, generally this information for computing the sales price is deemed reliable, providing the consideration paid did not involve a loan assumption.

Sometimes this tax is called by other names in other states such as a Documentary Stamp Tax. Sometimes cities in addition to counties charge a separate transfer tax.

_{At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.}