In Maine, when real property or even a partial interest in property is transferred, there is usually a real estate “transfer tax” due. That’s right, folks – not only do you have to pay the title company for closing and title insurance, the realtor their commission and the bank their fees, but the governor needs his piece of the pie as well!
The tax is collected by the state at a rate of $2.20 for every $500 of value of the property being transferred from one party to another, the value of the property computed by the Registry of Deeds as set forth in a declaration of value. So a transaction involving a home for $250,000 would result in a tax of $1100. The total amount is split evenly between the buyer and the seller of the property and is paid to the Registry of Deeds at the time the deed is recorded.
Remember, a deed is the legal written document that transfers title from one person to another. Title, while we are at it, refers to the ownership of a property. These terms can be confusing – deeds and titles are not the same thing, but when you own a property you will possess both the deed and title.
The document that outlines the real estate transfer tax is called the RETTD (Real Estate Transfer Tax Declaration), and is one of the many documents that gets signed at the real estate closing and is filed along with the deed at the Registry of Deeds Office.
There are a limited number of scenarios where this tax is not applicable. It is always best to communicate with the title company handling the closing well before the transaction occurs, to ensure all documents and fees reflected are accurate and nothing holds up the closing process.
Some of these exceptions may include: A situation where the deed is simply being modified or there is a correction of an error from a previous filing and the ownership status or price is not affected; deeds between family members, such as between husband and wife, parent and child or grandparent and grandchild; foreclosure deeds; and gifts of real property to government entities from a bona fide nonprofit land conservation organization are all exempt from the tax.
Rule of thumb: If you have any questions at all regarding transfer tax for your real estate transaction or if you feel you may be exempt from this fee, it is best to speak directly with the title company who can offer experienced and knowledgeable guidance as it pertains to your specific situation.
Cumberland Title is well versed in the applicability of the exemptions and will work closely with our customers in these circumstances.
Randee McDonald is the owner and office manager of Cumberland Title and can be reached by phone at 207-899-4900 or email at email@example.com.