Revenue Stamps are an Excise Tax on Real Estate
When a real property is sold, the deed that describes the real estate transaction (who the buyer and seller are, legal description, property address, etc) must be recorded in the county in which the property was sold to make it all legal. Revenue Stamps are placed on deeds when the real estate sales transaction is recorded with the local Register of Deeds. In the good old days, actual stamps like postage stamps were added to the deed to show how much the tax on the transaction was. Now, in most cases, a rubber stamp takes the place of actual stamps.
Revenue Stamps are also known as deed stamps OR the real estate excise tax. Some states, like Florida, call them Documentary Stamps or Doc Stamps for short. I know. It’s kind of confusing. I’m not sure why it’s so difficult for those in the real estate industry to decide on one name to describe something, but that’s just they way it is with so many real estate terms; they have three different names that all mean the same thing. That’s one reason why real estate classes are so challenging to pass! :-)
How is the Real Estate Excise Tax Calculated and Who Pays It?
Have you ever wondered how this real estate tax is calculated in North Carolina? The excise tax rate is $1 per $500 of the property sales price, is paid at closing, and is the responsibility of the seller. This tax has not been raised since 1991…but there’s always a threat. Let’s take a look at the examples below to see exactly how it’s computed.
How to Calculate Deed Stamps Example
If you were to purchase a home or land for $500,000, the revenue tax would be $500,000 divided by 500 which equals 1000. Or for you any of you who are math nerds and want to see the math sentence, my interpretation is below.
Purchase Price ÷ 500 = Excise Tax
I hope it’s starting to make some sense for you.
How to Calculate Purchase Price from Deed Stamps Example
Knowing the excise tax rate can also be helpful to find out the sales price of a property when you have access to the deed (you can find the deeds for most counties by going to the county’s register of deeds web site). Or if you need to pass the North Carolina Real Estate exam!
Consider this. Let’s say you are looking at a deed and the stamps show an excise tax of $156 for example. Take $156 and multiply by $500 which equals $78,000 for the purchase price. Here is the math sentence for my math geeks.
Deed Stamps x $500 = Purchase Price
I hope this helps clarify how to calculate the revenue stamps on the sale of property in North Carolina. If you are thinking about selling, give me a call! Listing inventory is down in Forsyth County as well as many other parts of the country, let me help you sell your home. The average time on market is going down, prices are going up, and interest rates are starting to move upward, Don’t hesitate to contact me if you have any questions.