How to Calculate Tax Stamps in North Carolina

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One of the most important considerations for any business is its location. While many businesses rent, some business owners like the security and relative freedom of buying a property. You likely know the typical costs that come with buying a property: closing costs, insurance, survey fees, title fees and taxes. If you are in the position of selling your property, you will run into some of these costs as well.

In addition to property taxes, many states have a transfer tax. North Carolina is one of these states. The transfer taxes are also referred to as tax stamps or excise tax.

What Is the North Carolina Excise Tax?

The NC excise tax is owed when a property is transferred from one party to another. The tax is paid in the county where the real estate is located. Half of the tax goes to the county. The county sends the other half of the tax to the state department of revenue. The person or business selling the property pays the excise tax.

How Do You Calculate NC’s Excise Tax?

The North Carolina real estate transfer tax rate is $1 on each $500 of the property’s value. For example, a $500,000 property would have a $1,000 transfer tax ($500,000 / $500 = $1,000). If the tax is not paid, the county has the right to go to court to collect the transfer tax.

Are There Exceptions to the Excise Tax?

You may not have to pay the excise tax if your real estate transfer is related to a will or a gift. The law also has provisions that the seller does not have to pay an excise tax when a property is transferred due to a merger or consolidation. If you are not sure about whether you will need to pay the excise tax, contact your county.

Which Counties Have a Land Tax?

Some counties also levy a land tax. This tax is paid in addition to the excise tax. The counties in North Carolina that have a land tax are:

  • Camden
  • Chowan
  • Currituck
  • Dare
  • Pasquotank
  • Perquimans
  • Washington

The land tax is 1% of the sales price or the value of the property as determined by the county. For a $500,000 property, the land tax would be $5,000. The county uses the money for capital expenditures like improving libraries, jails and recreational facilities.

The land tax applies to property sales, exchanges of property and long-term leases (leases of 10 years or longer). It does not apply to gifts and transfers due to a merger.

Other Potential Seller Expenses

In addition to the land and excise taxes, you should be prepared for other expenses if you are selling business property. You may need to pay an attorney to prepare the deed. You will also need to pay a commission to your listing agent or broker. Other expenses may come up as you negotiate with your buyer.

Keep the big picture in mind when you are selling a property. It is often a balance between getting the sales price you want and getting the property sold. Holding on to a property you are no longer using can be expensive, so it may be in your best interest to negotiate with potential buyers and get the property sold.