Who Pays Massachusetts Real Estate Transfer Taxes?

State law makes the seller responsible for paying real estate transfer taxes in Massachusetts. Unless a sales agreement specifies that the buyer will pay for the transfer taxes, or the deal is exempt from transfer taxes, the seller pays the tax. County registries of deeds collect transfer taxes, also called the stamp tax or deed excise tax, on real estate transactions.

The amount of the transfer tax depends on the price of the property and the location. The basic transfer tax rate in most Massachusetts counties is $2.28 per $500, or $4.56 per $1,000, as of 2010. State law sets the base amount. Special state legislation allows additional transfer taxes in specific places. Barnstable, Nantucket and Dukes counties have authorization to charge additional transfer taxes as of 2010. Barnstable County is on Cape Cod and Nantucket County is the island of Nantucket. Dukes County includes Martha's Vineyard and smaller islands in the Elizabeth Islands, off Cape Cod. Barnstable County charged a combined state and county rate of $6.12 per $1,000 in 2010.

To pay the tax, you buy excise stamps from the Registry of Deeds in the county where the property is located and attach the stamps to the deed or to other documents that transfer real estate. The law requires excise stamps on written instruments used to transfer real estate even if the parties don't record the transfer at the Registry of Deeds, according to a directive from the state Department of Revenue. The Department of Revenue issued a policy in 2005 that required future purchases of stamps from a specific county based on property location, rather than allowing stamp purchases from any county in the state.

The tax applies to real estate transactions when the price, minus existing liens and encumbrances assumed by the buyer, is more than $100. It doesn't apply to transactions if a local, state or U.S. government agency is one of the parties.

The Massachusetts Department of Revenue enforces the transfer tax. The stamps on a deed are proof of payment. If a taxpayer puts excise stamps on a deed, but didn't put enough stamps on it to cover the transaction, the state can assess the additional tax within three years and charge interest. If the taxpayer didn't put any excise stamps at all on a deed, there's no time limit and the Department of Revenue says it can assess the tax and penalties at any time.