What is it, and who Pays?
Closing on your property is approaching – now you’re wondering what are going to my costs for closing? Buyers and sellers both have closing costs, with Buyers typically paying more than a seller. The New Hampshire Transfer Tax is a fee that is paid by both the Buyer and Seller at the closing.
What is the Real Estate Transfer Tax (RETT)?
The RETT is a tax on the sale, granting, and transfer of real property or an interest in real property. The statute imposing the tax is found at RSA 78-B and NH Code of Administrative Rules, Rev 800. The tax is imposed on both the buyer(s) and the seller(s) at the rate of $.75 per $100 of the closing price. Lets say as a Seller you’re conveying your property for $500k. 500,000 divided by 100 = 5,000 multiplied by .75 = $3,750 PER SIDE due to the state of NH. Click Here for a link to a useful calculator!
What types of transactions are taxable?
All contractual transfers are subject to tax unless specifically exempt under RSA 78-B:2. Examples of contractual transfers include:
- Sales of land and buildings.
- Transfers between a business entity and its owners.
- Transfers between related business entities.
- Transfers from the state of NH, a county, municipality, or other political subdivision of the state. In such circumstances the tax applies only to the buyer.
- Transfers with the U.S. government or with any of its agencies, instrumentalities or any government corporation that is specifically exempt from state tax per federal law. In such circumstances, the tax only applies to the counterparty, and not to the U.S. government.
- Sale or granting of a right-of-way or an easement on property.
- Transfers through foreclosure or by deed in lieu of foreclosure.
- Leases of real estate for 99 years or longer, inclusive of renewal rights whether exercised or not.
- Transfers through deed issued as a result of a sheriff’s sale.
- Transfers of standing timber or exclusive rights to extract soil, gravel, minerals or other like materials from the land of another.
- Transfers of interests in time-share properties.
- Transfers of interests in real estate holding companies.
IRC § 1031 like-kind exchanges and other real estate for real estate swaps.
Are there exceptions to the Real Estate Transfer Tax?
Yes, among the exceptions are:
- Non-contractual transfers.
- Transfers between spouses pursuant to a final decree of divorce or nullity.
- Filing of a deed or other instrument that corrects a deed.
- Transfers to the state of NH, or a county, a municipality, or other political subdivision of the state of NH.
- Transfers of cemetery plots.
- Transfers that occur by devise, by intestate succession and descent, or by the death of a joint tenant.
- Transfers of interests in certain low-income housing projects subject to federal, state, or local land use restriction and rental housing affordability covenants which limit allowable rents charged to individuals or families, provided that the RETT was paid when the real property title was acquired.