Transfer Tax

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DEFINITION of 'Transfer Tax'

Any kind of tax that is levied on the transfer of official documents or other property. Transfer tax is paid by the seller of the property. Gift and estate taxes are both transfer taxes.

Transfer tax is also known as "excise tax" in some states.

BREAKING DOWN 'Transfer Tax'

Transfer taxes can be levied at the federal, state and local levels, depending on the type of property being transferred. States and local municipalities often tax the transfer of legal deeds, certificates and titles to property, while the Internal Revenue Service (IRS) taxes the value of the property itself through gift and estate taxes. Transfer taxes are usually nondeductible, although they may be added to basis on the sale of securities and/or investment property.

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RELATED FAQS
  1. How can a trust lower federal transfer tax liability?

    A trust is an arrangement in which an individual or entity controls property or funds on behalf of someone else without actually ... Read Full Answer >>
  2. Can I put my IRA in a trust?

    You cannot put your IRA in a trust while you are living. You can, however, name a trust as the beneficiary of your IRA and ... Read Full Answer >>
  3. How is cost basis calculated on an inherited asset?

    Typically, the cost basis on inherited assets is the fair market value as of the time of the decedent's death or actual transfer ... Read Full Answer >>
  4. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
  5. What is the difference between comprehensive income and gross income?

    Comprehensive income and gross income are similar, but comprehensive income is a specific term used on a company's financial ... Read Full Answer >>
  6. What is the difference between a revocable trust and a living trust?

    A revocable trust and living trust are separate terms that describe the same thing: a trust in which the terms can be changed ... Read Full Answer >>

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