Understanding Arkansas’s Transfer Tax: A Quick Guide
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
When selling a home in Arkansas, it’s important to understand the full scope of costs involved—including the Arkansas real estate transfer tax. This tax is a one-time fee paid when property ownership changes hands, typically calculated based on the sale price. While transfer taxes are common across the U.S., the specific amount and who pays can vary by state, county, and city.
In this guide, we’ll break down how real estate transfer taxes work in Arkansas, what sellers can expect to pay, and whether there are any exemptions.
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What are transfer taxes?
A real estate transfer tax is a fee imposed by state or local governments when property ownership is officially transferred from one party to another. According to the Federal Trade Commission, this tax applies when a home’s title—the legal document proving ownership—changes hands. The amount owed can vary based on local regulations and the property’s sale price.
The specific transfer tax rate depends on where the property is located, as state, county, and city governments often set their own transfer tax policies. These taxes help generate revenue for public services and infrastructure. Home sellers and buyers should be aware of these costs to avoid surprises at closing.
Who pays for transfer taxes?
The responsibility of who pays for transfer taxes at closing varies by state. In Arkansas, real estate transfer taxes are paid by the seller.
What are the types of transfer taxes?
Transfer taxes vary based on local guidelines. Here’s a quick look at how it works in Arkansas.
State transfer taxes
The Arkansas real estate transfer tax rate is $3.30 per $1,000 of the amount the property is sold for on transactions that exceed $100.
Other transfer fees
In addition to transfer taxes, there are possible fees to consider, such as from a homeowner’s association or another local neighborhood organization. Again, as these can vary heavily based on location, it’s important to consult a professional.
If you’re selling your home for sale by owner, consulting a professional might help you understand some of the finer points of the process and give you a better idea of what to expect.
Are transfer taxes deductible?
Unfortunately, real estate transfer taxes cannot be deducted from your income tax return. However, they may still provide some tax benefits when it comes to capital gains taxes.
Capital gains refer to the profit made when selling a home, and the IRS taxes these earnings similarly to other asset sales. The good news is that sellers can categorize transfer taxes as selling costs, which allows them to subtract these expenses from the home’s final sale price. This adjustment effectively reduces the amount of profit subject to capital gains taxes, potentially lowering the total tax burden on the sale.
Transfer tax exemptions
There are several possible Arkansas real estate transfer tax exemptions that a seller can qualify. These can include, but are not limited to:
- A property sold or transferred to the state of Arkansas or the United States
- Property sold to secure a debt
- Property transferred as part of a divorce, as ordered by the court, or due to an agreement between the two parties
These are just a few examples. For a full list, consult the state’s property tax affidavit form.
Estimating transfer taxes for your home sale
If you’re preparing to sell your Arkansas home, it’s important to understand how transfer taxes and other closing costs will impact your final profit. A quick way to get an estimate is by using HomeLight’s Net Proceeds Calculator. This tool factors in closing expenses such as transfer taxes, agent commissions, and repairs to give you a clearer picture of your potential earnings.
For a more precise breakdown, working with a top real estate agent can help you determine what transfer taxes and other seller costs apply to your sale. In some cases, these expenses may be negotiable depending on the market and contract terms. By discussing transfer taxes with your agent early in the process, you’ll be better prepared to understand your bottom line and any opportunities to reduce costs.
Editor’s note: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of Arkansas area tax services or attorneys should not be considered endorsements.
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