Which tax is commonly assessed on a deed during property transfer?

Which tax is commonly assessed on a deed during property transfer?

• A. Property Tax
• B. Transfer Tax
• C. Income Tax
• D. Capital Gains Tax

Answer: (B)

When ownership changes hands, the document that records the transfer— the deed—typically triggers a tax specifically tied to that transfer. This is the transfer tax. It’s usually calculated from the transaction price and paid when the deed is recorded with the government, making it a one-time charge tied to the act of transferring title. Property tax, by contrast, is an annual levy on the property's value and has nothing to do with the deed at transfer. Income tax concerns earnings from work or investments, not the act of transferring property. Capital gains tax applies to the profit from selling the asset and is reported on tax returns, not assessed on the deed itself at the moment of transfer.

When ownership changes hands, the document that records the transfer— the deed—typically triggers a tax specifically tied to that transfer. This is the transfer tax. It’s usually calculated from the transaction price and paid when the deed is recorded with the government, making it a one-time charge tied to the act of transferring title.

Property tax, by contrast, is an annual levy on the property's value and has nothing to do with the deed at transfer. Income tax concerns earnings from work or investments, not the act of transferring property. Capital gains tax applies to the profit from selling the asset and is reported on tax returns, not assessed on the deed itself at the moment of transfer.