Understanding Ohio’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.
Selling your home in Ohio involves several steps and costs, including real estate transfer taxes. These taxes are fees paid to the local, county, or state government when the title of a property changes hands. In Ohio, the specific rules and rates for transfer taxes can vary depending on the location of the property and the total value of the property.
Our guide will break down the process of handling transfer taxes in Ohio for home sellers. We’ll explore who is responsible for these taxes, the different types of transfer taxes that may apply at the state, county, and city levels, and any applicable exemptions or deductions you might be eligible for.
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Disclaimer: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of Ohio area tax services or attorneys should not be considered endorsements.
What are transfer taxes?
Real estate transfer taxes are levied by state or local governments when ownership of a property is transferred from one person to another. As defined by the Federal Trade Commission, this type of tax is applicable whenever the title of a property—essentially the legal documentation that confers ownership—is handed over to a new owner.
The amount of this tax can depend significantly on the property’s location, subject to local guidelines set by state, county, or city regulations.
These taxes serve as a key source of revenue for governments, helping to fund various public services and infrastructure projects. The exact rates of transfer taxes can vary, making it essential for property owners to familiarize themselves with their local tax obligations.
Who pays for transfer taxes?
Sellers in Ohio are responsible for paying the state’s transfer tax, which is levied as a conveyance fee.
What are the types of transfer taxes?
Ohio considers its real estate transfer tax a conveyance fee—which is similar to transfer taxes in other jurisdictions. Ohio’s conveyance fee is $1.00 for each $1,000 of the real estate’s value—typically based on the purchase price of the transferred property.
State transfer taxes
The conveyance fee is comprised of two parts. Statewide, the fee is calculated using a “mill levy” at a rate of one mill per $1,000 dollars of the value of property sold or transferred, which applies in all 88 of Ohio’s counties. One mill is equal to $1.00.
Property is levied based on the property’s assessed value, not its appraised value. The assessed value is 35% of the property’s appraised value.
Example Calculation of a Simple Tax Bill:
$100,000 (appraised value) x 35% = $35,000 (Assessed Value)
$35,000 (Assessed Value) x 1 mill (.0010) = $35 in tax per mill
County transfer taxes
Some Ohio counties may also impose a permissive real property transfer tax of up to 3 additional mills. As of 2009, 87 of 88 counties in the state levied this additional tax at rates ranging from 1 mill to 3 mills, with Ross County serving as the lone exception.
Other transfer fees
In addition to the statewide conveyance fee, some special provisions may also apply to your transaction.
- County commissioners can assess properties at a lower rate than generally levied in the county for transferred properties that fall under the state’s Homestead Exemption. This applies to senior citizens who meet income requirements and allows them to reduce their overall tax burden.
- Manufactured homes are also subject to the state’s conveyance fee.
- People or entities that purchase residential rental property in counties with populations over 200,000 must register their contact and property information with the county auditor within 60 days of the property transfer.
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 are not deductible on your income tax returns, which may seem like a missed opportunity for savings. However, there is a silver lining when it comes to reducing your capital gains liability. Capital gains are the profits you realize from the sale of your property and, like other asset gains, are subject to federal taxes.
To mitigate the impact on your finances, the IRS allows sellers to include transfer taxes as part of their selling costs.
By categorizing transfer taxes as selling costs, sellers can deduct these expenses from the final sale price of their home. This adjustment can significantly decrease the amount of capital gains tax owed on the profit from the sale, providing a crucial tax relief.
Transfer tax exemptions
Depending on the details of your transaction, you might be exempt from paying Ohio transfer taxes. Here are some examples of when exemptions would apply:
- Government and state agencies: Transfer taxes on sales or transfers to or from the U.S. government, the state of Ohio, or any of its political subdivisions are exempt.
- Family transfers: Gifts between spouses, to children and their spouses, and to surviving spouses or survivorship tenants are exempt.
- Nonprofit organizations: Properties sold to or from nonprofit agencies are likewise exempt.
- Corporate and trust transfers: Property a corporation transfers to a stockholder in exchange for shares during reorganization or dissolution.
- Other exemptions:
- Sales or transfers without monetary or tangible consideration is exchanged, and the transaction is not a gift.
- Transfers of easements or rights-of-way valued at $1,000 or less.
- Property sold to release security for a debt, for delinquent taxes, or under a court order.
- Transfers to a grantee other than a dealer solely for, and as a step in, the prompt sale to others.
- Property transferred to a trustee of a trust, where the grantor retains the power to revoke.
- Transfers from a trustee to the grantor based on the grantor’s power to revoke the trust or to withdraw assets.
- Transfers to the beneficiaries of a trust if the transfer occurs under provisions that became irrevocable upon the grantor’s death or if the fee was paid on the transfer from the grantor to the trustee.
Estimating transfer taxes for your home sale
Estimating the financial outcome of selling your home in Ohio, including transfer taxes, can be intricate. To get a quick and comprehensive estimate, consider using HomeLight’s Net Proceeds Calculator. This tool factors in closing costs such as transfer taxes, agent fees, and potential renovations, providing a clear picture of what you might earn from the sale.
Additionally, engaging a top real estate agent is advisable for a more detailed and accurate assessment of your specific situation. A skilled agent can offer insights into the local market and guide you through negotiations over who bears the cost of transfer taxes and other closing expenses. Early discussions about these costs with your agent can significantly influence your ability to negotiate effectively, potentially optimizing your financial returns from the sale.
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