Iowa Real Estate Transfer Tax

TransferIn working with sellers over the years and going over their normal closing costs, one of the costs that often times comes up is the real estate transfer tax. I have over the years done my best to explain it to them but there has always been a bit of a cloud of mystery around it. When I first started selling real estate here in Mason City, the real estate transfer tax at that time was $1.10 for every one thousand dollars of selling price less the first $500.00 of that price. For example, if a home would sell for say $75,500.00, the transfer tax would be calculated on $75,000.00. Sounds quirky, but that’s the way it was. Some years later, the State of Iowa decided to raise the transfer tax to $1.60 per thousand and it has been that way ever since. I believe some time in the late 1970s or early 1980s, the State created a law that there would have to be a Declaration of Value filed along with the deed setting forth the type of transfer, the social security numbers of the buyers and sellers along the amount of the sale price. One copy of that document was held at the courthouse and the other copy was filed with the State. If there were not tax identification numbers inserted on the buyers and the sellers portions, the County Recorder would refuse to file the deed. If someone did not use a correct social security number, there would later be an inquiry made to the closing agent and broker. This is why a broker like myself is more than careful about getting the correct information from the buyers and sellers.

Now, I will take you back years before I started selling real estate. When I was a young and impressionable agent, there was an aging broker who would like to take me off to the side and tell me stories about the good old days. Oh my goodness! Once he told me his liking for causing the general public to believe that he paid more for something than he did when he was in turn re-selling it. Did you know that in those days, when you would be filing a deed at the Recorder’s Office, they would basically ask you how many revenue stamps you wanted to buy? The person recording the deed was in control of what the revenue tax was to be. Wow! The aging real estate agent smiled at me and said, “I would tell them, “Give me a couple more stamps, because these are not enough.” Well, if someone is placing stamps on a deed that are “supposed to” reflect the real sale price, then the general public would believe that the sale price was true and accurate. It’s just another confirmation that in those days, we didn’t live in the Wild, Wild West, but rather the Wild, Wild North. I’m a bit thankful that there are a few more confirmations going on with the true and accurate sale prices via the Iowa Real Estate Transfer Tax and Declaration of Value.