New York Real Estate Salesperson ExaminationReal Estate CalculationsMedium
A property sold for $650,000. New York State imposes a transfer tax of $4.00 per $1,000 of consideration. What is the total transfer tax due?
- A$26,000
- B$2,600
- C$2,596
- D$2,604
Show answer & explanationAnswer & explanation
Correct answer: B. $2,600
The transfer tax is calculated on the selling price. Divide the selling price by $1,000 and then multiply by the tax rate: ($650,000 / $1,000) * $4.00 = $650 * $4.00 = $2,600.
Why the other options are wrong
- A. This incorrectly multiplies by $40 instead of $4, or divides by $100 instead of $1,000.
- C. This might come from miscalculating the 'per $1,000' or rounding incorrectly.
- D. This might come from miscalculating the 'per $1,000' or rounding incorrectly.
Transfer Tax
A state or local tax imposed on the transfer of real property, typically paid by the seller, calculated as a percentage or fixed amount per unit of the property's selling price.
- Also known as a 'deed tax' or 'documentary stamp tax'.
- Calculated on the full consideration (selling price).
- In NY, generally $4.00 per $1,000 of consideration.
Memory trick: Selling price by a grand, then times the rate as planned.