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Land transfer tax in North Carolina: the excise tax on deeds

North Carolina levies an excise tax on each instrument that conveys an interest in real property. The rate is one dollar on each 500 dollars, or fractional part, of the consideration or value conveyed. The seller pays it to the register of deeds before the deed is recorded, unless the parties agree otherwise in their contract.

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Quick summary: This guide explains North Carolina’s excise tax on deeds, often called the land transfer tax or revenue stamps. It covers the rate, who pays, the exemptions, and where the tax shows on a recorded deed. It is for landowners who plan to sell and for buyers who read deeds. The key takeaway: the statute sets one rate, puts the duty on the seller, and lists eight exempt transfers.

What the land transfer tax is

The land transfer tax in North Carolina is an excise tax levied on each instrument by which any interest in real property is conveyed to another person. It is a tax on the deed or other instrument, paid once, when the instrument is recorded. It is not a property tax and not an income tax.

The tax reaches every person conveying an interest in North Carolina real estate, other than a governmental unit or an instrumentality of one. Many people call it “revenue stamps” or “deed stamps” because of the older practice of affixing stamps to the deed.

The rate and how it is figured

The rate is one dollar on each 500 dollars, or fractional part of 500 dollars, of the consideration or value of the interest conveyed. A fractional part counts as a full 500 dollars.

Consideration or value Units of 500 dollars Tax
100,000 dollars 200 200 dollars
250,000 dollars 500 500 dollars
250,100 dollars 501 (the fraction counts) 501 dollars

The table is arithmetic from the statute, not an estimate. The base is the consideration or the value of the interest conveyed. When a price includes more than land, or when no cash price exists, a North Carolina real estate attorney determines the amount to report.

The statute also applies the tax to timber deeds and contracts for the sale of standing timber, as if they conveyed an interest in real property. See How to sell timber: cruises, bids, and the timber contract.

Who pays the tax

By statute, the transferor pays. The seller or grantor must pay the tax to the register of deeds of the county where the real estate is located, before the instrument is recorded. When one parcel lies in two or more counties, the tax goes to the county where the greater part of the land lies by value.

A contract can shift the cost. The buyer and seller can agree in the purchase contract which party bears the expense, and the closing statement shows the result. The statute still decides when the register of deeds collects it. Read the cost terms in your contract before you sign it. See What is in a land purchase agreement?

The short version: The register of deeds will not record a taxable deed until the tax is paid. The default payer is the seller. Whoever ends up bearing the cost, the amount comes from one statutory rate.

The person who presents the deed for recording must report the correct amount of tax due. If the tax goes unpaid more than 30 days after the register of deeds demands it, the county may sue to recover it in superior court.

Transfers the statute exempts

The statute lists eight exempt transfers of an interest in real property:

  1. By operation of law.
  2. By lease for a term of years.
  3. By or under a will.
  4. By intestacy, when an owner dies without a will.
  5. By gift.
  6. When no consideration in property or money is due or paid by the transferee to the transferor.
  7. By merger, conversion, or consolidation.
  8. By an instrument securing indebtedness, such as a deed of trust.

Each exemption turns on facts. A deed between relatives is a gift only if nothing of value passes back. A deed of trust is exempt because it secures a loan; the deed that conveys the land is not. See Deed of trust: how a loan is secured by land in North Carolina. For heirs who sell after a death, the sale deed is taxed even though the inheritance was not. See Selling inherited land in North Carolina.

A real estate attorney decides whether an exemption applies to your deed.

Local land transfer taxes

A few counties levy their own tax on top of the state excise tax. Perquimans County states that it is one of seven counties in North Carolina with a local land transfer tax. Its tax equals one dollar per 100 dollars, or fraction, of the sales price or value. The county lists the other six as Camden, Chowan, Currituck, Dare, Pasquotank, and Washington.

Local taxes follow their own rules. Perquimans County, for example, taxes certain leases longer than 10 years and lists its own exemptions. Ask the county tax office or register of deeds in each county where the land lies.

Take action: If you plan to sell land, start with what the record shows about the tract, then take the closing questions to your attorney. Start with Is your land a data-center site?

Where the tax shows on a deed

The tax shows on the recorded deed itself. Before the deed is recorded, the register of deeds must collect the tax and mark the instrument to show that the tax was paid and the amount paid. Look for that mark when you read a recorded deed.

Buyers and appraisers read the mark to back into a sale price. Treat it as a clue, not a fact. Exempt transfers show no tax, and the amount reflects the consideration or value reported, which may include more than the land. See How much is an acre of land?

Overpayments and refunds

A taxpayer who paid too much can request a refund in writing from the board of county commissioners where the tax was paid. The request must be filed within six months after payment and explain why a refund is due. The board holds a hearing. Before a refund issues, the taxpayer records a corrected instrument that shows the right amount.

Who answers the question

A North Carolina real estate attorney prepares the deed, figures the tax, and decides whether an exemption applies. The register of deeds collects the tax and records the deed. A tax professional answers income tax questions about the sale, which are separate from the excise tax. We read the record for a tract and leave the tax questions to those professionals.

Key recap

  • North Carolina taxes each instrument that conveys an interest in real property, at one dollar per 500 dollars or fraction of consideration or value.
  • The transferor pays the register of deeds before recording. The purchase contract can shift who bears the cost.
  • The statute lists eight exempt transfers, including gifts, wills, leases for a term of years, and deeds of trust.
  • Seven counties add a local land transfer tax, according to Perquimans County.
  • The register of deeds marks the recorded deed with the tax paid. A refund request has a six-month deadline.

Questions

How much is the deed excise tax in North Carolina?

One dollar on each 500 dollars, or fractional part, of the consideration or value of the interest conveyed. A 250,000 dollar sale carries 500 dollars of state tax. A local tax applies on top in a few counties.

Does the buyer or seller pay transfer tax in North Carolina?

The statute puts the duty on the transferor, which is the seller. The buyer and seller can agree in the contract to split or shift the cost. Your real estate attorney reads the contract and the closing statement with you.

Is a deed of gift subject to excise tax?

No. The statute exempts transfers by gift and transfers where no consideration is due or paid. A real estate attorney confirms that the deed qualifies.

What are revenue stamps on a deed?

Revenue stamps is the common name for the excise tax on deeds. The register of deeds marks the recorded deed with the amount paid. That amount can help you estimate the consideration, but it is not proof of the cash price.

References

Primary sources cited on this page, in APA style.

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