There are several fees and costs often associated with a property transfer, including gifts of property. Before completing those property transfers, both grantor and grantee should make sure they are aware of all possible financial implications and prepared to take care of those fees as needed.
Filing Fees
Filing fees are the direct fees associated with submitting a document in North Carolina and are paid when you take your quitclaim deed to the register of deeds office. North Carolina fees for recording real estate instruments can vary depending on the type of document.
While deeds of trust and mortgages cost $64 for the first 35 pages and $4 for each page after that, instruments other than deeds of trust and mortgages, including quitclaim deeds, typically cost $26 for the first 15 pages. Because quitclaim deeds are usually short documents, most parties will not face the additional $4 fee for extra pages.
Taxes
The taxes associated with a real estate transfer can be significant, even in cases in which property is transferred as a gift. Both grantor and grantee can face tax implications from a property transfer, which should be planned for ahead of time.
Real Estate Transfer Tax
North Carolina assigns a real estate transfer tax of $1 per $500 of property value, as laid out in N.C. Stat § 105-228.30.
Who Pays the Transfer Tax?
The transfer tax is paid by the grantor, or the current owner of the property.
Exemptions to the Transfer Tax
N.C. Stat. § 105-228.29 lays out several exemptions to the real estate transfer tax, including:
- Transfers due to the terms of a will
- Gifts
- When no consideration in property or money is paid for the property
- When the property is used to secure a debt
If you believe that your quitclaim deed should not face transfer taxes under these terms, consult with an accountant or tax professional to make sure that you fully understand your legal obligations.
US Gift Tax
The United States gift tax applies to high-value gifts between individuals. The IRs does provide some exemptions for gifts between family members up to a set amount each year. However, because of the high monetary value of real estate, many of those transactions will fall under gift tax requirements. Consult an accountant to make sure that you understand your responsibilities when it comes to paying a gift tax.
North Carolina does not assess a separate gift tax.
Capital Gains Tax
The capital gains tax is levied on the amount a property’s value increases between the time you buy it and the time you sell it.
Real estate often appreciates substantially in value, which means that depending on how long you held the property and its value when sold, you can face considerable capital gains taxes upon the sale. However, the IRS does provide some exceptions for properties that have been the grantor’s primary residence, which means that they lived in the property for at least two of the last five years.
North Carolina taxes capital gains as regular income, which means that if you see considerable gains from the sale of a property, you can expect to face tax implications for that purchase. Consult an accountant to make sure that you fully understand your tax obligations.
