Transfer tax

Transfer tax

A transfer tax is a tax on the passing of title to property from one person (or entity) to another.

In a narrow legal sense, a transfer tax is essentially a transaction fee imposed on the transfer of title to property. This kind of tax is typically imposed where there is a legal requirement for registration of the transfer, such as transfers of real estate, shares, or bond. Examples of such taxes include some forms of stamp duty, real estate transfer tax, and levies for the formal registration of a transfer. In some jurisdictions, transfers of certain forms of property require confirmation by a notary. While notarial fees may add to the cost of the transaction, they are not a transfer tax in the strict sense of the term.

In the United States, the term transfer tax also refers to Estate tax and Gift tax. Both these taxes levy a charge on the transfer of property from a person (or that person's estate) to another without consideration. In 1900, the United States Supreme Court in the case of "Knowlton v. Moore", 178 U.S. 41 (1900), confirmed that the estate tax was a tax on the transfer of property as a result of a death and not a tax on the property itself. The taxpayer argued that the estate tax was a direct tax and that, since it had not been apportioned among the states according to population, it was unconstitutional. The Court ruled that the estate tax, as a transfer tax (and not a tax on property by reason of its ownership) was an indirect tax. In the wake of "Knowlton" the Internal Revenue Code of the United States continues to refer to the Estate tax and the related Gift tax as "Transfer taxes."

In this broader sense, estate tax, gift tax, capital gains tax, sales tax on goods (not services), and certain use taxes are all transfer taxes because they involve a tax on the transfer of title.

Wikimedia Foundation. 2010.

Look at other dictionaries:

  • transfer tax — n: a tax (as a gift tax or estate tax) imposed on the transfer of property Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. transfer tax …   Law dictionary

  • transfer tax — A tax on the transfer of or succession to property. Colorado v Harbeck, 232 NY 71. A tax in the nature of an excise tax on the transfer of property. Cole v Nickel, 43 Nev 12, 177 P 409, 185 P 565. The state tax on inheritance has been called a… …   Ballentine's law dictionary

  • Transfer Tax — Any kind of tax that is levied on the transfer of official documents or other property. Transfer tax is paid by the seller of the property. Gift and estate taxes are both transfer taxes. Transfer tax is also known as excise tax in some states.… …   Investment dictionary

  • transfer tax — A tax upon the passing of the title to property or a valuable interest therein out of or from the estate of a decedent, by inheritance, devise, or bequest. See estate tax inheritance tax unified transfer tax Tax on the transfer of property,… …   Black's law dictionary

  • transfer tax — noun any tax levied on the passing of title to property • Hypernyms: ↑tax, ↑taxation, ↑revenue enhancement • Hyponyms: ↑inheritance tax, ↑estate tax, ↑death tax, ↑death duty * * * …   Useful english dictionary

  • transfer tax — noun a transaction fee (often relatively small in relation to the value of property) imposed on the transfer of title to property …   Wiktionary

  • transfer tax — A small federal tax on the movement of ownership of all bonds (except obligation of the US, foreign governments, states, and municipalities) and all stocks. Bloomberg Financial Dictionary …   Financial and business terms

  • Generation-skipping transfer tax — The U.S. Generation skipping transfer tax imposes a tax on both outright gifts and transfers in trust to or for the benefit of persons two or more generations younger than the donor, such as grandchildren. The generation skipping tax will be… …   Wikipedia

  • Real estate transfer tax — is a tax that may be imposed by states, counties, or municipalities on the privilege of transferring real property within the jurisdiction. Total transfer taxes range from very small (for example, .01% in Colorado) to relatively large (2.2% in… …   Wikipedia

  • generation-skipping transfer tax — A federal tax imposed on large amounts of money given or left to a grandchild or great grandchild. Its purpose is to keep families from avoiding the estate tax that would be due if the oldest generation left property to their children, who then… …   Law dictionary