Understanding the Maine 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.
Selling your home in Maine comes with several things to consider, with one of the most notable being real estate transfer taxes. These taxes are levied whenever a property changes hands, acting as a percentage of the sale price. It’s important to understand how these costs will affect you, as they can impact the overall profit from the sale of your home.
Our guide will detail how transfer taxes work in Maine, providing sellers with a clear picture of what to expect when it comes time to sell their property. From state to city-level charges, along with potential exemptions and deductions, we’ll cover all you need to know to manage the transfer tax landscape in Maine effectively.
Connect with a Top Agent to Help Maximize Value
Even rockstar agents can’t make your tax liability disappear, but HomeLight data shows that the top 5% of agents across the U.S. help clients sell their home for as much as 10% more than the average real estate agent, helping offset the tax bill.
Disclaimer: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of Maine area tax services or attorneys should not be considered endorsements.
What are transfer taxes?
Real estate transfer taxes are a fees imposed by either state or local governments whenever property ownership is transferred from one individual to another. This definition, as provided by the Federal Trade Commission, highlights the tax’s role in the property sale process.
The tax is calculated based on the property’s sale price, and the amount due can vary widely depending on the property’s location. Each state, county, or city may have its own rates and rules determining the seller’s or buyer’s final cost.
The primary purpose behind these taxes is to generate revenue for local governments, funding various public services and infrastructure projects. The amount owed in transfer taxes can significantly impact the financial aspects of selling a home, making it crucial for sellers to understand how these taxes work in their locality.
Who pays for transfer taxes?
In Maine, both the buyer and the seller are responsible for paying the transfer tax, with each paying one-half of the total tax, levied at a rate of $2.20 for each $500 or fractional part of $500 of the value of the property being transferred.
What are the types of transfer taxes?
Transfer taxes will typically vary based on local guidelines but can generally be broken down into three categories — state, city, and county, depending on the state. Here’s a quick look at how it works in Maine:
State transfer taxes
There are two transaction types in Maine that require a transfer tax. From the state’s revenue services website:
“Controlling Interest – A separate Return/Declaration must be filed for each transfer of a controlling interest in the county where real property is located.”
“Real Estate – The real estate transfer tax is imposed on each deed by which any real property in this state is transferred. The register of deeds will compute the tax based on the value of the property as set forth in the declaration of value.”
County transfer taxes
Transfer taxes in Maine will also vary by county. For example, in Somerset County, the transfer tax is calculated at $2.20 per $500 of the sale price or value, with all amounts rounded up to the nearest $500.
In Cumberland County, the tax is calculated at a rate of $4.40 per thousand.
City transfer taxes
In Portland, Maine, the rate for transfer taxes is established at $2.20 for every $500 or part of the property’s value that’s being transferred. This tax is equally shared between the seller (grantor) and the buyer (grantee). To illustrate, consider a property with a value of $10,000.
Under this tax structure:
- The value of the property is $10,000.
- The tax rate is $2.20 for each $500 of the property value.
- Therefore, the total transfer tax would be $2.20 * 2 (since the tax is imposed on both the grantor and the grantee) = $4.40.
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 with some of the finer points of the process and give you a better idea of what you can expect.
Are transfer taxes deductible?
Transfer taxes, unfortunately, cannot be deducted from your income tax returns. However, there is a silver lining for those hoping to minimize their tax obligations. Capital gains—the profit made from the sale of your property—play an important role here. Like earnings from other assets, the federal government taxes these gains.
Yet, sellers may be able to reduce the impact of these taxes. By categorizing transfer taxes as selling costs, sellers can deduct these expenses from the closing sale price of their home. This maneuver effectively reduces the taxable capital gain, potentially lowering the overall tax bill on the profit received from the sale.
Transfer tax exemptions
Some Maine sellers might be eligible for exemptions from transfer taxes, depending on specific circumstances. The state recognizes a variety of exemptions, including:
- Governmental entities.
- Mortgage deeds, deeds of foreclosure, and deeds in lieu of foreclosure.
- Deeds affecting a previous deed.
- Deeds between certain family members.
- Tax deeds.
- Deeds of partition.
- Deeds pursuant to mergers or consolidations.
- Deeds by a subsidiary corporation.
- Deeds prior to October 1, 1975.
- Deeds by a parent corporation.
- Deeds of distribution.
- Deeds executed by public officials.
- Deeds of foreclosure and in lieu of foreclosure.
- Deeds given pursuant to the United States Bankruptcy Code.
- Deeds; trustee, nominee, or straw party.
- Certain corporate, partnership, and limited liability company deeds.
- Deeds to charitable conservation organizations.
- Limited liability company deeds.
- Changes in identity or form of ownership.
- Controlling interests.
- Transfers pursuant to transfer on death deed.
Estimating transfer taxes for your home sale
For a quick and easy estimate of what you might make from your Maine home sale, consider using HomeLight’s Net Proceeds Calculator. This tool accounts for various closing costs, such as transfer taxes, agent fees, and any renovations, providing you with a quick view of your potential net proceeds.
Additionally, to better handle the complexities of transfer taxes and other closing expenses effectively, partnering with a top real estate agent is highly recommended. Real estate agents possess the expertise to offer an accurate assessment of your potential costs and guide you through negotiations, potentially saving you money. The responsibility for transfer taxes can vary, and with the right guidance, you may be able to negotiate these costs to your advantage. Discussing transfer taxes with your agent early in the selling process ensures you have a clear understanding of your financial position when closing your home sale in Maine.
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