If you want to transfer property in Iowa, using a quitclaim deed, you should consider the different filing expenses and other related fees to understand the total cost of the process.
Recording Fees
- § 331.604 establishes the following fees for recording certain documents:
- $5 fee for each page or fraction of a page unless the page contains multiple transactions. In that case, the recorder will charge $5 per transaction.
- $1 for each transaction for which a fee is paid
Each county may also charge its own fees for recording, so check with your county recorder’s office before you submit your quitclaim documents.
Taxes
When you transfer real estate using a quitclaim deed, you may be liable for federal and state taxes as follows:
1. Transfer Tax
- § 428A establishes a transfer tax for certain real estate transactions.
Who Pays the Transfer Tax?
The grantee pays transfer tax when they submit the deed to the county recorder.
Exemptions to Transfer Tax
Per § 428A.2, transfer tax does not apply to the following real estate transactions:
- Any will, plat, lease, or mortgage instrument
- Any deed conveying or receiving land for the US or State of Iowa or any agency or political subdivision thereof
- Deeds conveying cemetery lots
- Deeds that modify or correct an existing deed without additional consideration
- Deeds between spouses or a parent and child, without consideration
- Tax deeds
- Deeds of partition without consideration, unless a party takes shares greater than their undivided interest
- Deeds conveying property as a result of a merger, consolidation, or reorganization of a corporation or LLC
- Deeds conveying property within a family-owned company
- Deeds transferring property pursuant to a divorce decree
- Deeds transferring easements
- Deeds returning property to lienholders in lieu of foreclosure or forfeiture
- Deeds executed by public officials while performing in their official capacity
- Deeds transferring assets under a will to heirs or devisees
- Deeds with consideration less than $500
- Deeds transferring property to beneficiaries of a trust without consideration
Tax Rates
Transfer tax is based on the amount of the property sale price over $500. The county charges $0.80 for every $500 after the initial $500. If your transaction is exempt from real estate transfer tax, note the specific exemption on your quitclaim deed.
2. US Gift Tax (Form 709)
Iowa does not charge a state gift tax. The federal government may assess a gift tax on the quitclaimed property if your consideration exceeds the exemption limit, as established by the Internal Revenue Service (IRS). Check with a tax professional or attorney if you are unsure whether you are liable for gift tax. If so, include Form 709 in your annual income tax filing.
3. Capital Gains Tax
Iowa has repealed its capital gains tax for non-farming real estate transactions that occurred after January 1, 202. Capital gains deductions may still apply for real estate used in a farming business.
Even if you do not owe capital gains tax, you may still owe the federal government if you received consideration for the property you transferred with a quitclaim deed. The IRS establishes the capital gains rates based on your annual household income and how long you owned the property, among other considerations.
Speak with a real estate attorney or tax expert to determine whether you owe Iowa or federal capital gains tax. If you do owe capital gains tax or are eligible for a capital gains deduction, you can file the appropriate forms with your annual tax return.
