There are a number of fees and taxes that will accrue during the process of a commercial sale. It's helpful to be aware of the most common ones so that you aren’t in for a financial surprise when completing the sale. We touched on three important fees you’ll want to be aware of during a commercial transaction in this blog, but we want to expand on one of those fees today - the deed tax. In today’s blog, we explain how a deed tax is calculated and what you can expect to pay if you’re purchasing a commercial property in Minnesota.
What Is A Deed Tax?
A deed tax is a one-time fee that is imposed by a state, county or similar government body when the ownership of a title or real property is transferred from one party to another during the course of a sale. The specific cost of the deed tax can vary by location.
Who Pays The Deed Tax?
Now you’re probably wondering who is responsible for paying this deed tax that originates during the course of a sale. In most instances, the seller is responsible for paying this deed tax. However, it is not expressly stated that the seller is required to be the one to pay this tax. While it is seen as the seller’s responsibility in the eyes of the law, there is no statute that outlaws sellers from writing into a purchase agreement that the buyer will be the one responsible for this tax. For properties that are in high demand, a buyer who is willing to make this concession may win out if the offer amount is very close or identical.
If a property isn’t fielding a lot of offers or the seller is more motivated to move the property, it’s unlikely that they will try to make an arrangement for the buyer to cover these fees. Since it is standard for the seller to cover the deed tax, writing this change into a purchase agreement can end up turning buyers away. Talk with your real estate agent or your title services company to ensure you understand who will be responsible for paying the deed tax if you are moving forward with a commercial purchase or sale.
Deed taxes are standard during a sale, and it’s an expense you’ll want to be aware of, especially if you’re working on a tight budget. The greater the property value, the higher this tax will be, but it will still be relatively small given that it’s one-third of one percent of the property’s value.
For more information about deed taxes in Minnesota, connect with the team at Commercial Partners today at (612) 337-2470.