If you transfer a South Dakota property via a quitclaim deed, you may owe recording fees and taxes. The following is a summary of costs and fees associated with this document.
Filing Fees
South Dakota charges recording fees for quitclaim deeds under SD Codified Laws § 7-9-15. Recording fees are $30 for the first 50 pages plus $2 for each additional page or fraction thereof.
Taxes
1. Real Estate Transfer Tax
Per SD Codified Laws § 43-4-21, every transfer of real property is subject to a state-imposed tax called a real estate transfer tax.
Who Pays the Real Estate Transfer Fee?
Per SD Codified Laws § 43-4-21, the grantor should pay the real estate transfer tax.
Exemptions to Real Estate Transfer Taxes
SD Codified Laws § 43-4-22 exempts the following transactions from real estate transfer taxes:
- Transfers by or to the US or South Dakota or any political subdivision.
- Confirmation or correction to a previously executed and recorded deed.
- Transfers between spouses or parents and children with nominal consideration.
- Tax sales, foreclosures, or deeds in lieu of foreclosure.
- Conveyances of partitioned properties.
- Transfers for LLC or corporation mergers, consolidations, or reorganizations.
- Transfers by a corporation’s subsidiary to its parent corporation for no consideration, nominal consideration, or solely for surrender or cancellation of the subsidiary’s stock.
- Conveyances of real estate from a decedent’s estate through a decree of distribution.
- Transfers of property between a grantor and a corporation where the grantor owns the majority of the capital stock.
- Transfers between a corporation and stockholders or creditors (or between an LLC and its members or creditors) to dissolve the organization.
- Transfers of grave sites or cemetery lots.
- Conveyances between individuals as a gift without any consideration.
- Transfers for which no consideration was given.
- Transfers between an LLC and its members.
- Transfers pursuant to a divorce decree, annulment, or separate maintenance.
Per SD Codified Laws § 43-4-23, if your quitclaim deed doesn’t require a transfer fee, you must state “exempt from transfer fee” on the document and indicate which subdivision of SD Codified Laws § 43-4-22 applies.
Real Estate Transfer Fee Rates
A fee of 50 cents per $500 of value or a fraction thereof is charged.
2. US Gift Tax (Form 709)
The state doesn’t charge a gift tax, but the federal government charges a tax for gifts valued over the annual exemption limit. Exemptions change annually, so check with the Internal Revenue Service (IRS) to confirm whether you owe gift tax as the property grantor. If so, complete Form 709 and submit it with your annual income tax return.
3. Capital Gains Tax
South Dakota also doesn’t charge a tax on capital gains. However, you may owe the federal government if you are the grantor and received consideration for the real estate exchange via a quitclaim deed.
The IRS establishes capital gains tax rates each year. Rates vary depending on your taxable income, filing status, and the amount of your capital gain. If you’re unsure whether you owe capital gains tax, consult a real estate attorney or tax preparation professional.
