Massachusetts Real Estate

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Massachusetts Tax Stamps ~ Hidden Costs in Selling Your Home

 Massachusetts tax stamps As a Realtor representing many home owners selling their homes, it has come to my attention numerous times that many people are unaware of the tax on selling a home in Massachusetts. This tax is levied on the sale of any home sold in the commonwealth of Massachusetts. Presently the tax rate is $4.56 dollars per thousand.

In other words if you sell a home for $500,000 your tax would be $4.56 x 500 for a total cost of $2280. When you have certain expectations for what your check will be coming from a closing, a short fall of $2280 would not be a pleasant experience.

This is one of the largest expenses a home owner would have when selling their property in Metrowest Massachusetts aside from paying a Real Estate commission.

Some of the other expenses in selling a home in Massachusetts would be a Title V Septic inspection if you do not have town sewer. The typical cost for a

Title V inspection runs between $600 - $900 depending on how easy it is for the title V inspector to get to the tank and distribution box. This cost would also include the pumping fee. Most of the time the system gets pumped at the time of the Title V inspection.

Other costs include hiring an attorney to represent you in negotiations on a purchase and sale agreement or attending the closing. Legal representation can vary quite a bit. As a general rule of thumb the costs for legal representation in a Real Estate sale can vary anywhere from $300-$1500 depending on the scope of work.

Having a lawyer represent you is never a bad idea. Realtors are NOT allowed to council buyers and sellers in legal matters.

Some of the smaller miscellaneous expenses include a smoke/carbon monoxide inspection which usually run around $25, and recording the new deed at the registry which is typically around $125-$150.

See also Massachusetts home selling costs .

 

Considering selling your Massachusetts home? See preparing your Massachusetts home for the Spring selling season and Top ten mistakes to avoid when selling your Massachusetts home .

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The above information regarding Massachusetts tax stamps  was provided by Bill Gassett, the team leader for RE/MAX Executive Realty the #4 RE/MAX Team in Massachusetts in 2007.

 Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of Hopkinton MA and other Metrowest towns for the last 22+ Years. Bill's office is conveniently located in the center of Hopkinton MA at 77 Main Street.

I have a passion for Real Estate and love to share my marketing expertise! I would welcome the opportunity to earn your business.

For Metrowest Massachusetts and Hopkinton Real Estate and homes see Hopkinton Real Estate . Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site .

I cover Real Estate sales in the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Douglas, and Framingham MA.

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Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and others.

Comment balloon 40 commentsBill Gassett • October 23 2007 01:34PM

Comments

Bill,

Oh my goodness, your transfer tax is unbelieveable! I had no idea it was so high. That's probably one of the few things that cost less in CA. 

For example, our median price in our city is $700,000, transfer tax would be $770.00 on that amount. It's $1.10 per thousand, technically .55 cents per $500.00.

You've provided some really great info for prospective buyers in your area.

Posted by Lynda Eisenmann, Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co (Preferred Home Brokers) over 11 years ago
Lynda - Thanks for stopping by and commenting. You bring up a great example of how fees can vary form state to state. I find that there are so many home owners that do not realize what a high tax they pay to sell their home.
Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 11 years ago
Bill, That "is" pretty high. A lot of people do not realize these costs are there until they are at the closing and it's something we need to make them aware of. We also have an "out of state" tax here in RI.
Posted by Karen Hurst, Rhode Island Waterfront! (RICOASTALLIVING.COM) over 11 years ago
Karen - Thanks for commenting. I agree Massachusetts always seems to get their fair share of taxes :) Educating our clients is certainly important. It is the worst feeling to find out about something like this unexpectedly.
Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 11 years ago
Great info Bill - thanks for the inside look at this.
Posted by Americas Relocation Home Services (META TRES) over 11 years ago
You know this is the kind of information that makes real estate transaction "automation" really difficult.  They "could" figure it out but the cost to keep it all up to date will be interesting to say the least.  What's even more interesting are the local norms as far as who's expected to pay what.  In my market it might be the seller who pays the title insurance while in your market they buyer does...I'm not saying for sure...no free answers here...good luck automating that evil web start ups!!!
Posted by Shannon Lefevre, Shannon Lefevre, PA Your Naples Smart Girl (John R. Wood Properties) over 11 years ago
Shannon - This is very true...state to state there are so many different customs in Real Estate.
Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 11 years ago

Bill - Here in California lawyers are not involved in the transaction. If a client asks a legal question, I do advise them to consult a real estate attorney. Great post.

Posted by Tom Plant (WINEormous.com) over 11 years ago
Tom - Thanks for commenting. I was pretty sure that was the case. You guys have title companies do the legal end of things - Correct?
Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 11 years ago

You are Right Bill.....great point!! I could see this being a very unpleasant surprise, especially for a first time buyer.

Posted by Lisa Mahoney, Worcester County Massachusetts Real Estate (Angel's Realty) over 11 years ago
Lisa - Very true - nobody like those kind of surprises. Thanks for commenting.
Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 11 years ago

I hate to see such a high tax on real estate transfers.  Here in Florida the Transfer tax is  70 cents per $100.  For example on a $200,000 home that's $1400.  Every once in a while the legislators talk about raising it.  The citizens complain and they drop it.

By the way, thanks for reading and commenting on Man Shot By His Dog

Posted by Dan Forbes over 11 years ago
Dan - Thanks for commenting. That is a heavy tax too. I did not realize Florida's was so high!
Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 11 years ago

You are providing some GREAT information- especially for someone who is selling their home for the first time. It's great to know what your real expenses will be so you know your true out of pocket and what to expect at the closing table.

 

Posted by MAUREEN STACCATO over 11 years ago
Maureen - Thanks for dropping in and for the compliments. Finding out at the closing table that you are going to be short a couple grand of what you were expecting is not a good feeling. The same can be sad for the other expenses as well. A good Realtor will educate their clients as to what all the costs involved with selling are.
Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 11 years ago
Bill, our current Grantor's Tax here in Virginia is 10 cents per $100 or $500 on a $500,000 home.  The legislature in July passed a bill authorizing local jurisdictions to raise it to 50 cents per $100 -- as part of a "Regional Congestion Relief Fee" and part of the Transportation package.  This will make it significantly more expensive to sell a home.  Fortunately, none of the local counties have implemented this additional fee at this time.
Posted by Brian Block, Northern Virginia & D.C. Real Estate (RE/MAX Allegiance, Managing Broker/Branch Vice President) over 11 years ago

"Hidden" cost?  The only way that this cost would be hidden is if the Listing Agent did not advise their client as to the 2nd largest cost of selling a home (in most cases) in Massachusetts.  The 'Tax Stamps,' which are essentially an excise tax on the sale of one's home, is not a legal matter - it is a fact.  And it is one that should appear on ANY seller's net sheet.  After selling homes in MA (approx 900 personal transactions to date) for over 17 years I still am stunned when I get to a closing (on the sale side) and the seller says "... What are Tax Stamps?"

Posted by Gerry "Realtyman" Bourgeois over 11 years ago
Gerry - You are correct. Every Realtor should educate their seller client what the costs involved with selling their home are. Unfortunately there are many times, as you mention, this does not happen. The "message" here is that many homeowners are surprised when I inform them there is a "sales tax" for selling a home in Massachusetts. Most do not know it exists unless they have sold before in MA.
Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 11 years ago

Edwardo - The post is about Massachusetts tax stamps when selling your home not the repeal of State income taxes. You do bring up a few good points though.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) almost 11 years ago

Note to people who are looking to get a deal on buying a bank-owned property in Mass: according to the standard "take it of leave it" P&S banks make you sign when you make an offer, they will NOT pay transfer taxes.  I just had the unpleaseant experience of learning the day before the closing that this rather large line item was moving from their side of the HUD statement to mine...

Posted by Jimbo almost 11 years ago

Jimbo that is unfortunate. Did you or your attorney not notice this on the P&S? This is actually the 1st time I have heard of the Mass tax stamps being paid by the buyer. I guess nothing is surprising when it comes to  a bank owned property.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) almost 11 years ago

And in Worcester area they get hit with the Title Search too!

Posted by Marcia Kramarz, CDPE,LMC,CBR (Re/Max Executive Realty) almost 11 years ago

I find it's best to educate sellers prior to signing the listing contract so they are aware of expenses and can figure out "bottom line" pricing accurately. It's also a good idea to review figures again when negotiating an offer prior to signing it so there are no miscalculations down the road.

Posted by Samantha Nichols, Massachusetts Real Estate Specialist (ERA Belsito and Associates) almost 11 years ago

Marcia - Good point. It is interesting how different counties have little things they do differently.

Samantha - Your right an educated client is the best client you can have. They certainly appreciate it as well.

Thanks for commenting on my post about Tax stamps.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) almost 11 years ago

Thank-you for this post. My parents are currently selling their home in Medford. I have concerns because thier real estate agent has not had them signed any paperwork, not even the right to sell. They have the paperwork, but nothing is signed by him or them! Then I asked them about the tax stamp. I guess he told them not to worry about it, it's only a couple of bucks. Since they are on a fixed income and owe a good amount on the house, I do worry about it. I am really starting to think that they need another agent.

Posted by Kris C over 10 years ago

Hi Kris - It is against the code of ethics for a Realtor to put a home into MLS without signitures from the seller. It is real strange that the agent would not do it for their own protection. The tax stamps are certainly not a couple of bucks. The tax applies to everyone selling a home in Massachusetts. The Realtor doesn't sound like he is that professional.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

If you think sellers are disappointed about hearing they have to pay tax stamps to sell their home in Massachusetts, you should see the reaction when they find out that they have to split the cost of tax stamps with the seller on that new home in New Hampshire.

Posted by Richard Rosa, Exclusive Buyer Agent (Buyers Brokers Only, LLC) over 10 years ago

Rich that is interesting. I did not realize they did things that way in New Hampshire.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

I always include this in my net sheet for sellers and they are always surprised.

Posted by Lesley Lambert, Real Estate Agent - Realtor - Westfield, MA - 413- (Park Square Realty serving Western MA) over 10 years ago

Lesley it is certainly very important to make sellers aware of all the costs in selling their home. The 1st person a disappointed client is going to look at is their Realtor.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

One of the things I hate about MA is that I need an attorney to buy and sell a home...in CA it was so easy with title companies..

Posted by Dave over 10 years ago

Dave - There are a few things different here in Mass as you are probably already aware. Most states do not have the two step process of doing an offer and then a purchase and sale on a home either.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill You've got a great site with links to everything Homeowners & Buyers need to know. I'm really impressed with all the hardwork you've put into this & can only assume you do the same with your clients. They are lucky to have you. 

Posted by Christine Eddy, Marketing for Realtors about 10 years ago

Thanks Christine. I really appreciate your compliments. I have tried to make my website as informative as possible for those wishing to buy or sell Real Estate in the Metrowest Massachusetts area.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) about 10 years ago

Bill -  you must have missed this trick question on the real estate exam!!!  The correct answer is $2.28 per $500 of value.  While it sounds like $2.28 per $500 and $4.56 per $1,000 of value is the same, it is not because of rounding to the nearest $500 or $1,000.

Do you want more trivia?  The excise tax currently in effect (evidenced by a stamp) is actually $2.00 per $500 of value plus a surcharge of 14% of that amount. 

Did you know that the Massachusetts Excise Tax is not the same throughout the Commonwealth?  In Banstable County,  the excise tax is $2.85 per $500 of value and Dukes and Nantucket counties require an additional fee of 2% of the purchase price, which is paid to the local land bank commission.

Lastly, many sellers think that they must pay the excise tax on the transfer of real estate.  They don't.  But because real estate excise taxes are not deductible for federal tax purposes (they are an addition to the basis of the home), the reasons why a buyer would do this are very limited.

How did I remember all of this? I guess I had a good teacher!

Posted by Martin Kalisker, Professional Standards & Legal Assistant (Greater Boston Association of REALTORS) almost 10 years ago

Martin - I did not miss the answer to the question. It makes little difference whether you want to call the excise tax 2.28 per $500 or 4.56 per thousand. The answer is exactly the same as the registry will collect the same amount figured either way. In other words there is no rounding differences when figuring the tax.

Let me show you the math so you understand. Let say a home sells for $555,250. The math both ways is as follows: $555,250/1000 = 555.250   555.250 x 4.56 = $2531.94

Your way - $555,250/500 = $1110.5 x $2.28 =  $2531.94

As you can see the answer is exactly the same. It is just semantics on the way you want to call the rate.

I did know that Barnstable County has a different tax rate as well.

 

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) almost 10 years ago

I realize this post is old, but I just sold a house. I just called the Mass. DOR to find out exactly what that Mass. Tax Stamps was. In other words, how do I treat it on my tax return? Is it deductible, etc.? The rudest woman ever (of course, they work for the State) told me to call the Registry of Deeds! I told her the money ultimately goes to the Mass. DOR. What the heck does the Registry of Deeds know about filing taxes???? I give up.

KB

Posted by KB about 9 years ago

Hi KB - My understanding is that the Massachusetts stamp tax is deductible as an expense.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) about 9 years ago

Thanks Bill! So you're saying that even though it's a State "tax" like the excise tax on my car that is deductible on Schedule A on my Federal return, in this case it isn't deductible? I should just use the figure to reduce my gain (or conversely increase my basis) on the profit on the sale?

Posted by KB about 9 years ago

I had wondered the same thing myself and was told that it was a deductible item. Of course I would check with your accountant to be certain.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) about 9 years ago

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