Like many states, Massachusetts charges a transfer tax when property changes hands. Transfer taxes, sometimes also called excise fees, are charged relative to the net sale price of the property, so the more valuable the property, the higher the tax. Under Massachusetts law, the seller is responsible to pay the taxes, which means that calculating the tax due for buyers is a simple process -- it's zero dollars. For sellers, it's a matter of multiplying the sale price by $4.56 per $1,000 of value or 0.456 percent.
Confirm that the property transfer is subject to transfer tax. Massachusetts excludes some transfers from taxation. The exclusions include gifts, transfers through corporate mergers or dissolutions, and sales to state housing authorities. Foreclosure deeds and deeds in lieu aren't always exempt from transfer tax.
Subtract the value of any liens or other debts against the property at the time of sale. For instance, if you are selling a $402,000 property and the buyer is assuming your $321,000 mortgage, you would pay transfer tax only on the $81,000 of equity.
Round the property's value up to the nearest $500. For instance, whether the property's selling price is $321,001, $321,100 or $321,499, you would round it to $321,500.
Multiply the property's rounded value by the tax rate to find the property tax. In most of Massachusetts, the tax rate is 0.456 percent or $4.56 per $1,000 of value, as of October 2013. In Barnstable County, though, the tax is 0.612 percent or $6.12 per $1,000 of value. On Nantucket and Martha's Vineyard, many transfers are subject to an additional 2 percent land bank fee as well. First time home buyers may be able to exempt some of the cost of their purchase, though, thanks to an exemption built into the laws that govern the land banks. As of October 2013, the exemption applies to the first $400,000 of value, but it can vary over time.
While the tax rates in this article are current as of October 2013, it's wise to check with your county's registry of deeds to find out what the current rate is. Most have websites that you can use.
- Stewart Title: Deed Stamps and Exemptions
- Springfield Registry of Deeds: Excise Tax Calc.
- Barnstable County Registry of Deeds: Fee Schedule
- County of Dukes County: Fee Schedule
- Martha's Vineyard Land Bank Commission: Home Page
- Nantucket Islands Land Bank :Filing
- Split Rock Real Estate: What Is the Martha's Vineyard Land Bank?
- While the tax rates in this article are current as of October 2013, it's wise to check with your county's registry of deeds to find out what the current rate is. Most have websites that you can use.
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.