topic Transfer tax while buying a house in Deductions & credits

Transfer tax while buying a house

ceseker — Tue, 03 Mar 2026 01:42:21 GMT

Based on below statement :

Deductible real estate taxes, also called property taxes, include taxes paid at closing when buying or selling a home, as well as certain taxes paid to your county or town's tax assessor (either directly or through a mortgage escrow account) on the assessed value of your property.

We paid transfer tax while buying our house(closing), is it included deductible real estate tax for State of Maryland?

Re: Transfer tax while buying a house

MindyB — Tue, 03 Mar 2026 01:47:26 GMT

No, the transfer tax you paid at closing is generally not deductible as a real estate tax on your income tax return. While property taxes (which are based on the assessed value of your home) are deductible if you itemize, transfer taxes and recording fees are considered "settlement costs."

You should still keep a record of these costs, as they are part of your cost basis. When you sell your home, the basis of the house plus improvements will be deducted from the sales price when computing your gain.

See this helpful article to find all the ways you can save money on taxes this year Tax Breaks and Home Ownership

Re: Transfer tax while buying a house

ceseker — Tue, 03 Mar 2026 01:52:58 GMT

We have paid both seller and buyer transfer taxes because the house that we purchased was foreclosure. Is this rule still applicable in this situation?

Re: Transfer tax while buying a house

DianeW777 — Wed, 04 Mar 2026 19:26:33 GMT

Yes, the rule still applies to your situation. The transfer tax is always added to the cost basis of the property and becomes part of the purchase price as well as other closing costs. The link provided by our Tax Expert @MindyB has valuable information and is posted here again for your convenience. Tax Breaks and Home Ownership

Government Recording and Transfer Charges

Recording fees
Title Charges
Lenders Title Policy
Settlement or Closing Fee (Includes Transfer fees)
MLC - Municipal Lean Certificate
Title Exam
Owners title Insurance

You can include these closing costs and add them to the cost basis of the property.

Loan charges - Loan charges are part of the loan, not cost basis

Application fees
Lender fees
Appraisal Fee
Inspection Fee
Condo Questionnaire
Credit Report
Debt Report

You can't include in your basis the fees and costs for getting a loan on property.

@ceseker