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Deed Tax Consideration
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Deed Tax is calculated by multiplying the tax rate of .0033 (.0034 Hennepin/Ramsey Counties) by the net consideration.
Net Consideration
Net consideration is the total purchase price less the value of any liens or encumbrances, included in the purchase price, that remain on the real property at the time of the sale and are not removed as a result of the sale (mortgage being assumed by buyer, special assessment liens, mechanic liens, etc.).
The basis upon which to calculate the deed tax includes the following:
- Purchase price
- Costs seller has agreed to pay on behalf of the buyer (seller paid closing costs, etc.)
- Premiums paid by the purchaser (commission at auction sale, etc.)
- Improvements made by the seller which are included in purchase price
- Gifts of equity included in the purchase price
Examples
Real property is sold for a purchase price of $ 250,000. The seller will use part of the purchase price to reimburse themselves for repairing a garage on the property prior to the sale.
Deed Tax Basis: $ 250,000.
Real property is purchased at an auction for $ 500,000. The buyer is required to pay a sales premium of 5 %.
Deed Tax Basis: $ 525,000.
Real property is sold for a purchase price of $ 150,000. The buyer is assuming the seller’s mortgage, which has a balance of $ 50,000.
Deed Tax Basis: $ 100,000.
Note: Except in the case of a gift, when the consideration for a conveyance includes something other than money, the consideration is presumed to be the fair market value of the real property being conveyed. Minnesota Statutes, Chapter 287.20 subdivision 2(g).