what is a transfer tax 
a transfer tax is a charge levied on the transfer of ownership or title to property from one individual or entity to another a transfer tax may be imposed by a state county or municipality it is usually not deductible from federal or state income taxes although it may be added to the cost basis when profit on the sale of securities and investment property is calculated transfer tax is considered an excise tax in some states alexanderford getty imagesunderstanding a transfer taxa transfer tax on real estate may be imposed by state county or municipal authorities for the privilege of transferring real property within the jurisdiction the government is effectively taxing the transfer of a legal deed certificate or title from a seller to a buyer the amount of the tax is based on the property value and the property classification the seller is liable for the real estate transfer tax although it is not uncommon for an agreement to be reached for the buyer to pay the tax some states require that the buyer pay the tax if the seller does not pay it or is exempt from paying it some states do not impose a transfer tax on real estate they include alaska arizona idaho indiana louisiana mississippi missouri montana new mexico north dakota texas utah and wyoming 1transfer taxes on inheritancesa transfer tax may also be imposed on the transfer of property by inheritance this is sometimes called a death tax particularly by opponents of inheritance taxes a death tax may refer to any gift tax estate tax or generation skipping transfer tax that is imposed on the value of property inherited after the death of the owner in 2023 exclusions for estates worth less than 12 92 million protect most americans from owing estate taxes in 2024 the maximum increases to 13 61 million 2in recent years all but the wealthiest americans have been protected from these taxes by high dollar amount exemptions at the federal level the federal estate tax applies to a decedent s gross estate which generally includes all of the person s financial and real assets for taxpayers inheriting in 2023 the exclusion amount is 12 92 million 13 61 million for 2024 there is also a gift tax that applies to transfers of money or property made while a person is living the federal gift tax range applies to the giver of a gift not the recipient for amounts above 17 000 for 2023 and 18 000 for 2024 2the generation skipping transfer taxthe generation skipping transfer gst tax is an additional tax on a transfer of title to a property that skips a generation the gst tax was implemented to prevent families from avoiding the estate tax for one or more generations by making their gifts or bequests directly to their grandchildren or great grandchildren rather than to their children 3the same exclusions apply to the gst the transfer must be worth more than 12 92 million in 2023 13 61 million in 2024 for the tax to kick in 2state transfer taxessixteen states and the district of columbia have either an estate tax or an inheritance tax and one state maryland has both an estate tax is levied against the assets of the deceased while an inheritance tax is owed by the recipient of the assets 4who pays the transfer tax the party responsible for paying the transfer tax is often the seller in the case of real estate transfers but not always in some states the responsibility is split equally and in others there is no real estate transfer tax at all for inheritances the tax is paid by the recipient for estate taxes it s paid by the estate of the deceased 