Massachusetts Tax Stamps - What They Mean to Sellers

One of the first things we do when counseling our home sellers is to go over the costs they will be responsible for.  The biggest expense for home owners is, of course, the professional fee paid to their real estate broker.  The second largest expense is the Massachusetts Tax Stamps- an expense that many home owners are not even initially aware of.

The Commonwealth of Massachusetts derives revenue from the sale of real estate through the sale of state excise tax stamps.  They are typically $4.56 per $1000 of the sales price, although there are a few counties in Massachusetts that charge more.  Barnstable County, for example, has charged $6.12 per $1000 since July 1, 2009.  Dukes (Martha's Vineyard) and Nantucket also charge an additional 2% land bank fee.

The charge for the tax stamp will show up on the HUD-1 Settlement Statement, line 1203, at closing.  Most of the time, this statement will be available a day or so prior to the closing, if you want to review it ahead of time with your attorney.  The tax is paid at the Registry of Deeds and the deed cannot be recorded, or the sale finalized, until the registry confirms the receipt of the tax payment.

If the transfer itself is under $100 (one hundred dollars) then the Registry of Deeds will not charge tax stamps, although the recording fees will still have to be paid.  This is why when a title is being transferred from a husband to wife, or in other similar situations, often the sales price will be a lesser dollar amount and not reflect the actual value of the home.

What does this mean for you, if you are trying to sell your home?  You want to make sure to factor in this cost when determining your net proceeds.    In the last 12 months, the average sale price of a single family home in Chelmsford was approximately $330,000.  The tax stamp owed would be $1,504.80 ($4.56 x 330).

At first glimpse, you might think they have it better in New Hampshire because the tax is split evenly by the Seller and the Buyer.  It is called the Real Estate Transfer Tax, and it is $15 per $1000, with both the buyer and the seller paying $7.50 per $1000.  A home with the same price of $330,000 comes with a tax cost of $2475 each!

If you have further questions about tax stamps, closing costs or real estate in general, please feel free to comment below or contact us directly!  We are never too busy to answer your questions!