My wife and I are buying a new house in MD where the state and county transfer taxes will be about $8000. We are going to close in December this year, but will probably take a standard deduction. Can we deduct the property transfer tax even though we are going to take the standard deduction this year? Are transfer taxes deductions or credits?
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This entry was posted by admin on January 27, 2010 at 1:52 pm under tax planning. Tagged County, County Taxes, Deduction, Property Tax, Property Transfer Tax, Standard Deduction, State, State Taxes, Tax Deduction, Taxes, Transfer, Transfer Taxes, Work.
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Mike F says:
The transfer tax you pay is not deductible, it adds to your cost basis. When you sell the house the amount will reduce your gain but if you live in the house for 2 years within a 5 year period the first $500K of gain will be excluded anyway so essentially there is no tax benefit to the transfer tax you pay.
January 27, 2010, 2:12 pmYou may want to check on whether it is a deduction in Maryland, I seriously doubt it. I searched and found no support for a deduction of the transfer tax in Maryland.
Sorry.
Nick, CPA says:
They aren’t deductible anyway, so it doesn’t matter – but for the state and local taxes that ARE deductible, you can only deduct them if you itemize, not if you take a standard deduction.
January 27, 2010, 2:42 pmJudy says:
Sorry, but transfer taxes are not deductible. Ad valorem property taxes are but transfer taxes and recording fees are not. You have to add the transfer taxes to the cost basis of the home. This will reduce any gain on the sale and any tax due at that time, if any.
January 27, 2010, 3:12 pmIf you take the standard deduction you cannot deduct any taxes of any sort whatsoever.
Thanks for the heads-up on that MD ripoff. Guess I won’t be moving there any time soon!