There are several fees to take into account when transferring property in Montana. Both grantor and grantee can face tax implications in addition to the fees assessed for the property. Consult a tax professional if you have questions about your financial obligations.
Filing Fees
Montana charges a fee of $7 per page for any document filed with the County Clerk and Recorder. If you have a nonstandard document that does not meet the margin, ink color size, and paper size requirements laid out by Mont. Code § 7-4-2636, you can expect to pay an additional $10 fee. Those requirements include:
- Black or blue ink for all handwritten documents
- 8 1/2″ x 11″ or 8 1/2″ x 14″ paper
- 3″ margins at the top of the first page, and 1″ margins for all subsequent pages
- 1″ margins at the bottom of each page
- 1/2″ margins at the sides of each page
Checking your document to make sure that it meets these requirements will help you avoid unnecessary fees.
Taxes
Properly assessing tax implications can ensure that the real estate transfer process goes smoothly and that you do not run into expensive fees later.
Documentary Transfer Tax
While many states require a documentary transfer tax in order to legally transfer property, Montana does not have a real estate transfer tax. However, you will need to fill out a Realty Transfer Certificate as part of the transaction.
US Gift Tax (Form 709)
Form 709 reports any large gifts given, including large property transfers. The gift tax is assessed on any gift given to another party without the expectation of similar value in return.
The gift tax can apply both in situations where the grantor gifts the property to the grantee directly and cases in which the grantor may not charge the full purchase price of the property to the grantee. For example, a parent who sells a property to a child may require the child to pay only a small percentage of the value of the property. In that case, a gift tax would be due on the extra value of the property.
Capital Gains Tax
A capital gains tax is assessed when a property is sold for more than its original purchase price. Real estate values often increase over the time the property is held. When the owner sells the property, they may net a considerable profit. Capital gains taxes would be assessed on the sale price over the initial price of the property.
The IRS does allow some exemptions to the capital gains tax, including cases in which the owner of the property has lived in that property as their primary residence for at least two out of the last five years.
Members of the Uniformed Services, the Foreign Service, or the intelligence community may also have the right to exemptions when they have orders that put them more than 50 miles from their property for at least 90 days, or they must live, on orders, in government housing for at least 90 days. Working with an accountant can help you determine whether you qualify for an exception to the capital gains tax.
