Real estate transfer fees used to be complex in Kansas, but have recently been reformed to make the process much simpler and easier to figure out. The new process is based on the number of pages in the mortgage or deed filing and paid by buyers.
There are many costs and taxes you have to plan for when selling your home. One of the most variable, and often most difficult to understand is the transfer tax. To start, this confusion often comes from the fact that this tax is called something different in almost every city and state.
Some places call them a real estate transfer tax, some use document transfer fee, and some even call it a stamp tax. Many other states use a combination of all three. In Kansas, it used to be called a mortgage registration tax, which was complex and often hard to calculate, and has recently been replaced.
Who Pays Transfer Taxes in Kansas: the Buyer or the Seller?
As of January 1st, 2019, there is no longer a transfer tax or a mortgage registration tax in the state of Kansas. However, small fees related to documentation and registration may still apply during the closing process, and these fees would typically be paid by the buyer.
Can You Deduct Transfer Taxes?
Document recording fees are not usually deductible from your current taxes. They are a one time fee that you pay during the home buying process and aren't counted as a recurring tax that is deductible (like property taxes).
Since the recording fee does add to the cost basis of your home, they can help offset any capital gains owed when you decide to sell. For example, if you owed capital gains taxes on a profit of $20,000, after the exclusion, and your registration fee totaled $2,000, your tax liability would actually be $18,000.
However, since the first $250,000 in profit from your home sale is excluded from paying capital gains, there likely aren't many home sellers who will benefit from this in Kansas.
Other Considerations
Transfer taxes are typically accounted for during the closing process of your transaction. In many states who pays the fee is negotiated as part of the sale, however given the new structure it is expected that the fee would almost always be paid by the buyer. These fees should be noted on your HUD-1 forms when closing documents are signed.
Given that Kansas has recently changed their system, there is little experience or data to draw on to examine how much this will impact home sales. However, given the simplified process impacts should be minimal and the process more straightforward for buyers.
If you are looking to sell in Kansas, and want to know how to get top dollar for your home, start by contacting a Clever Partner Agent. Clever connects you with local, expert real estate agents from major brands and brokerages (Keller Williams, Century 21, and RE/MAX). They will guide you through the home selling process and save you money in doing so.
Buyers should also be working with agents who are informed of these new changes in state law. An expert real estate agent should be able to connect you with a mortgage and title expert, who can walk you through how these changes will impact your home purchase.
