I am doing my first sub 2 deal and I was told by a mortgage lender that if the seller was to sign the deed over to me the transfer taxes would be charged based on the assessed value of the property and not the actual selling price. Is this correct?
By the way the seller said that to avoid any costly transfer taxes he would “dollar deed” the property over to me. Which of the two are actually the case?
Any opinions will be greatly appreciated?
You will have to call your county courthouse and speak to someone in the Treasurer’s office or the Registrar of Deeds office.
The answer is specific to your state and your county.
Transfer tax is a larger issue than the actual expense…In my county it is only 1.10 per thousand. The amount paid in transfer tax is the indicator to the title companies for the amount you paid for the house thus that transfer price is indicated on the Prelim. When flipping a property within six months the lender for the borrower is going to see the price you paid and compare that price against the price you’re selling at… If there is a large difference and a marginal borrower you may have to justify to the lender your profit…
I use one of three seasoning letters I have created and haven’t had an issue to date. Just be aware of these facts when deciding what tax amount to pay.
I have known Buyers who have inflated the transfer tax amount to indicate a higher sales price thus eliminating a seasoning issue although I am confident that when you sign the transfer statement you’re signing under penalty of perjury…
Happy Investing
Michael Quarles