The Massachusetts transfer tax, known officially as the deed excise, is a state tax on real estate transfers charged at $2.28 for every $500 of the sale price in most of the state. The seller pays it at the Registry of Deeds when the deed is recorded. Barnstable County uses a higher rate of $3.24 per $500, and Nantucket buyers owe a separate 2% land bank fee on top of the state excise.1Mass.gov. Massachusetts Tax Rates2Secretary of the Commonwealth of Massachusetts. Deed Indexing Standards
The Rate and a Sample Calculation
The standard rate of $2.28 per $500 (or fraction of $500) of taxable consideration works out to roughly 0.456% of the sale price.1Mass.gov. Massachusetts Tax Rates Some quick numbers at the standard rate:
- A $500,000 sale generates $2,280 in excise.
- A $600,000 sale generates $2,736.
- A $750,000 sale generates $3,420.
Barnstable County applies a surcharge that funds the Cape Cod and Islands Water Protection Fund, pushing the rate to $3.24 per $500.2Secretary of the Commonwealth of Massachusetts. Deed Indexing Standards The same $500,000 property recorded in Barnstable County owes $3,240 instead of $2,280.
What Counts Toward the Taxable Price
The deed must state the full consideration in dollars, and the registry will delay recording if the deed recites something vague like “love and affection” or a nominal “$1” without explanation.2Secretary of the Commonwealth of Massachusetts. Deed Indexing Standards Debt forgiveness counts too. In a deed in lieu of foreclosure, the forgiven mortgage balance is part of the taxable consideration.
One rule catches many people off guard. When the buyer assumes an existing mortgage or takes the property subject to it, the assumed mortgage amount is deducted from the consideration before the excise is calculated.3Mass.gov. Directive 88-18: Computation of Excise; Lien or Encumbrance So on a $400,000 sale where the buyer assumes a $150,000 mortgage, the excise is calculated on $250,000. The deed should state both the full price and the outstanding mortgage balance so the registry can compute the tax correctly.
No excise is owed at all when the stated consideration is $100 or less.4Mass.gov. Directive 91-2: Application of Deeds Excise to Transfers by Certain Federally Sponsored Corporations That effectively covers nominal-consideration gifts, as long as no other valuable consideration changes hands.
Who Pays and When
Chapter 64D places the tax on “the person who makes or signs the deed,” which in practice is the seller or grantor.5General Court of Massachusetts. Massachusetts General Laws Part I, Title IX, Chapter 64D, Section 2 Buyers and sellers can agree in the purchase contract to shift the cost, but no matter who funds the payment, the stamps have to be on the deed before the registry accepts it.
Payment happens at recording. Most registries want a separate check for the excise, apart from recording fees, and typically require an attorney’s check or bank check rather than a personal check. The filer submits the deed along with a statement showing the consideration, any mortgage assumption, and the excise due. Confirming the exact figure with the registry before submission avoids delays at the recording window.
Exemptions From the Excise
Chapter 64D exempts several categories of transfers from the tax:6General Court of Massachusetts. Chapter 64D – Excise On Deeds, Instruments And Writings
- Transfers between spouses, and between former spouses as part of a divorce decree.
- Conveyances to the federal government, the Commonwealth, or a Massachusetts municipality. Chapter 64D’s definition of “person” specifically includes political subdivisions of the Commonwealth.
- Transfers where the stated consideration is $100 or less, which covers most gifts and charitable donations of property.
- Corrective deeds filed solely to fix an error in a prior deed, where no actual change of ownership occurs.
If a transfer qualifies, the deed itself should state the basis for the exemption. The registry needs to see why no stamps are attached before it will accept the document.
The Nantucket Land Bank Fee and CPA Surcharges
Nantucket County adds a 2% land bank fee on real property transfers, and unlike the deed excise, the buyer pays this one.7Nantucket Land Bank Commission. Nantucket Land Bank Commission – Rules and Regulations The fee is calculated on the fair market value of the interest transferred, and the Commission can challenge a stated price it believes understates market value. On a $1 million Nantucket home, the land bank fee alone is $20,000, on top of the Barnstable-rate excise the seller owes.
Municipalities that have adopted the Community Preservation Act also charge a flat surcharge on most registry filings. It is a per-document fee rather than a percentage of the sale price, so the dollar impact is small compared to the excise. Over 190 Massachusetts communities have adopted the CPA, so buyers and sellers in most parts of the state will see the line item at closing.
Federal Tax Treatment
The deed excise is not deductible on a federal income tax return. How it does affect federal taxes depends on which side of the deal you are on.8Internal Revenue Service. Tax Information for Homeowners
If a buyer pays the excise, the amount is added to the property’s cost basis, which reduces the taxable gain at a future sale.9Internal Revenue Service. Basis of Assets On a $500,000 purchase with $2,280 in excise, the starting basis becomes $502,280 (plus other qualifying settlement costs). If the seller pays, the excise counts as a selling expense that reduces the amount realized on the sale, lowering the reported gain.10Internal Revenue Service. Publication 523 – Selling Your Home
What Happens If the Excise Isn’t Paid
The immediate consequence is that the registry will refuse to record the deed, which leaves the buyer without public proof of ownership and effectively freezes the transaction until the excise is paid.11General Court of Massachusetts. Chapter 64D – Excise On Deeds, Instruments And Writings – Section 6B
Beyond the recording refusal, delivering or filing a deed without the required stamps carries a penalty of up to $100, as determined by the Commissioner of Revenue, who can reduce or waive it for good cause.12General Court of Massachusetts. Massachusetts General Laws Part I, Title IX, Chapter 64D, Section 6A Falsely affixing stamps to a deed carries its own separate penalties under Section 7 of Chapter 64D. Most closings are handled by an attorney who calculates and pays the excise as part of settlement, so outright non-compliance is uncommon.