REALWorld Law

Sale and purchase

Taxation of asset deals

Which taxes are relevant/which transaction costs will be incurred when buying real estate as an asset (asset deal) and how are the transaction costs shared between the buyer and seller?

United States

United States

Depending on where the property is located the following may be payable:

  • city, county and state transfer and excise taxes;
  • mortgage recording taxes; and
  • sales taxes.

The types and rates of these taxes vary depending on locality, property type and purchase price

In most instances, the applicable state, or the county in which the property is situated, has established customs for:

  • allocation of escrow fees;
  • title insurance and survey costs;
  • recording charges; and
  • city, county and state transfer taxes.

In some parts of the country the transfer tax is customarily paid by the seller and the mortgage recording tax is customarily paid by the borrower (eg the purchaser).

The SPA should comprehensively describe how costs are to be allocated between the parties.