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Real Estate Transfer Taxes?

Buying a house is quite expensive. There are additional costs attached to it. You would think that selling a house would be a breeze, but it’s not.

There are also expenses involved in selling a house. There are closing costs and real estate commissions to be paid by either the buyer or seller. There are also attorney’s fees to consider.

Here’s another one: real estate transfer tax.

Every state has a different regulation when it comes to real estate transfer tax. In most cases, the seller of the property will pay for the transfer tax. In some, transfer taxes are not imposed.

What are real estate transfer taxes?

Also known as a “deed transfer tax”, this is a one-time fee levied by the state or local authority during the transfer of the property from the seller to the owner.

The cost depends on the value of the real property.

The basic tenet is the higher the sale price of real estate, the higher the percentage of the real estate transfer tax.

Government jurisdictional agency imposes the transfer tax. It could be the state, country or city, but mostly the local governments.

How is the real property transfer tax different from estate tax, property tax and gift tax? One can easily confuse these four taxes but they are actually distinct.

Estate tax is imposed on assets that were handed down to the heirs after the owner’s death. When the value of the assets is over $11 million, the tax will be imposed by the state. Some states also refer to it as inheritance tax.

Property tax, on the other hand, is a recurring levy imposed on properties. It is one of the sources of income among local governments.

The gift tax is imposed on a property that was given freely. The property has to be valued at a certain amount to be levied the gift tax. This is typically imposed following the estate planning.

Meanwhile, the estate tax is imposed upon death based on the owner’s will. The gift and estate taxes are similar to the real estate transfer tax but with distinctive charges and limitations. They are also paid to the IRS.

Distinction.

The real estate transfer taxes are levied on actual transfer of the real estate and usually between the property owner or seller and a third-party buyer.

Each state has different tax regulations. The amount is also based on the value of the property.

As an example, note the different real estate transfer taxes based on a house that’s worth $500,000:

Colorado – $50

Florida – $3,500

New York – $2,000

North Carolina – $1,000

That’s how stark the differences are among states. This is actually something to consider when buying a house.

Still, there are other states that don’t impose a real estate transfer tax at all:

Alaska.
Idaho
Indiana
Kansas
Louisiana
Mississippi
Missouri
Montana
New Mexico
North Dakota
Texas
Utah
Wyoming

Most of the counties in Utah, too, don’t levy transfer tax.

In most cases, it is the seller that is saddled with the real estate transfer tax. But as the states have autonomy on this, there are instances when it varies.

In Pennsylvania, for example, the tax is divided between the buyer and seller. In some areas, the buyer also pays for it.

Although, the buyer and seller can make a deal regarding who pays for this or if they want to split it. The provision will be included in the contract.

Justice Department Publishes Cryptocurrency Enforcement

For years, the government has been at a loss on how to regulate cryptocurrency. It seems like it is making some headway as Attorney General William Barr announced the release of “Cryptocurrency: An Enforcement Framework.”

This was released by the Cyber-Digital Task Force of the Attorney General. The framework tackles the challenges associated with cryptocurrency, which is a form of online exchange of payment. There is an emerging trend and the Justice Department realized that there are threats linked to the use of cryptocurrency in the market.

Among the subjects of the publication is the relationships that the Justice Department has with other regulatory and enforcement organizations in the U.S.

What will the Justice Department do in regards to the growing cryptocurrency? The strategies are indicated in the framework.

“Cryptocurrency is a technology that could fundamentally transform how human beings interact, and how we organize society,” Barr said about the digital currency technology. “Ensuring that use of this technology is safe, and does not imperil our public safety or our national security, is vitally important to America and its allies.” The framework created by the task force is one of a kind, said Barr.

There are worries that cryptocurrency is being used for criminal activities, which is why the government, for years, has been trying to study ways to introduce regulations for this tech innovation.

“At the FBI, we see first-hand the dangers posed when criminals bend the important technological promise of cryptocurrency to illicit ends,” said FBI Director Christopher Wray. “As this Enforcement Framework describes, we see criminals using cryptocurrency to try to prevent us from ‘following the money’ across a wide range of investigations, as well as to trade in illicit goods like criminal tools on the dark web.”

As an example, Wray talked about the ransomware attacks. This is when criminals hack a person or an organization’s data. They will either threaten to release the victim’s data to the public or block the victim from accessing their personal files unless they get paid, hence, the reference to ransom.

Wray explained that to hide their identities, the criminals will use cryptocurrency to purchase the malware and other tools to succeed in their ransomware intent. They will also ask that the ransom be paid through cryptocurrency so authorities will have a hard time tracing the money’s movement.

The FBI is working hard to find a way to evolve with the criminals. With the latter using cryptocurrency, the FBI has to be in step with them.

Assistant Attorney General for the National Security Division John C. Demers, who is also a member of the task force, said that the U.S. has been successful in curbing terrorists from funding violent activities using traditional money.

“As the Cryptocurrency Enforcement Framework explains, we will adapt our strategy and tools to 21st century financing, including to combat the use of cryptocurrencies to evade enforcement and harm our national security,” said Demers.

Authorities acknowledge the importance of cryptocurrency as it presents an innovative way to do business without leaving the house.

Task force member Brian C. Rabbitt, also the assistant attorney general for the Criminal division, explained that the framework provides critical information to the public so that they will understand and comply with the legal requirements to enjoy “fast-developing technologies.”

The Cryptocurrency Enforcement Framework opens with an essay penned by Associate Depute Attorney General Sujit Raman, the chair of the task force.

Part one of the framework presents the threat overview of cryptocurrency. The framework identifies three categories of criminal activities that are transacted through cryptocurrency:

  1. Financial transactions associated with the commission of crimes.
  2. Money laundering and the shielding of legitimate activity from tax, reporting or other legal requirements.
  3. Theft.

Part II cites the countermeasures to the criminal or illicit uses of cryptocurrencies. This part also highlights the collaborative partnership among the following agencies: Department of Justice, Securities and Exchange Commission, the Commodity Futures Commission, and agencies within the Department of Treasury.

The goal is to work together to enforce the law within the cryptocurrency space.

Part III is also the last part and it summarizes the government’s challenges and limitations when it comes to cryptocurrency enforcement.

The Cryptocurrency Enforcement Framework is the second comprehensive report from the Attorney General’s Cyber-Digital Task Force.

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