When modifying a deed or initiating a real estate transfer using a West Virginia quitclaim deed, you may be responsible for filing fees and federal and state taxes.
Filing Fees
According to W. Va. Code § 59-1-10, county clerk’s offices collect a recording fee of $30 to file a quitclaim deed in the state. If the document is more than five pages long, the county clerk’s office will charge an additional $1 fee per page.
Taxes
1. Real Estate Transfer Tax
W. Va. Code § 11-22-2 states that the county clerk’s office will collect a tax on real estate transfers (also called an excise tax). Once the county clerk’s office receives payment, the deed will receive a property transfer stamp under W. Va. Code § 11-22-4.
Who Pays the Transfer Tax?
The grantor is usually responsible for paying the transfer tax unless otherwise agreed upon with the grantee.
Exemptions to Transfer Tax
There are exemptions to the transfer tax under W. Va. Code 11-22-1(4), including the following transfers:
- Transfers between husband and wife or parent and child.
- Transfers by will.
- Transfers worth less than $100.
- Deeds made pursuant to conversions to LLCs from trusts, limited partnerships, partnerships, or corporations.
Tax Rates
According to W. Va. Code § 11-22-2, the state transfer tax rate is $1.10 for every $500 of the property’s value.
2. US Gift Tax
Because quitclaim deeds are popular for situations where the grantee provides no or nominal consideration in exchange for property, the grantor may be subject to a federal gift tax. IRS Form 709 outlines the amount owed by those gifting property over a certain amount, which changes annually.
Please note that some exclusions may apply. For example, suppose the grantor gives real estate to a political organization or a qualifying charity. In either case, they may be able to deduct the property’s value from their taxable income.
3. Capital Gains Tax
West Virginia taxes capital gains as ordinary income. According to the state’s Tax Division, the tax is equal to 6.5% of the estimated capital gain derived from the sale or transfer. Depending on your income bracket, the state-specific capital gains tax may range between 3 and 6.5%.
The US government also inflicts a capital gains tax at the federal level, as discussed in IRS Publication 551 and IRS Topic No. 409. If the grantor holds the property for more than one year, they’ll pay long-term capital gains tax, which can be 0, 15, or 20%.
If they hold the property for less than one year, they’ll pay short-term capital gains tax, which is the same rate as the federal ordinary income tax (depending on your income bracket).
