What is the real estate transfer tax in Arkansas?
Arkansas taxes each deed or instrument that conveys real estate at $3.30 per $1,000 of consideration, when the consideration is more than $100. The Arkansas Department of Finance and Administration states the rate that way, and it applies to mineral rights transfers as well.
Under the statute, the rate has two layers. Ark. Code § 26-60-105(a) levies $1.10 for each $1,000 or fractional part, and § 26-60-105(b) adds $2.20 for each $1,000 or fractional part, which is earmarked for the purposes listed in § 15-12-103. Together they make $3.30, or 0.33%.
The rate is the same everywhere in the state. Arkansas doesn’t have county or city transfer taxes stacked on top, and it doesn’t raise the rate for large commercial deals. A $400,000 duplex and a $12 million apartment community pay the same percentage.
Who pays the transfer tax in Arkansas?
Arkansas law sets a default: unless the parties agree otherwise, the tax is paid one-half by the grantor or seller and one-half by the grantee or buyer. That rule is in Ark. Code § 26-60-106, which also says the tax applies at the time of transfer and is computed on the full consideration for the real estate.
The wording of § 26-60-105(b) describes the $2.20 additional tax as paid by the purchaser, so the default allocation is worth confirming with your title company before closing. Most sellers simply write the split they want into the purchase agreement, which overrides the default.
On a $2,000,000 sale the total tax is $6,600, so a 50/50 split costs the seller $3,300. It’s a real number but rarely large enough to hold up a deal.
How the Arkansas transfer tax is paid
The tax is paid by buying documentary stamps, which Arkansas calls a Real Estate Transfer Document, and attaching them to the deed. Under § 26-60-107, the grantee or the grantee’s agent attaches the proper stamps or documentary symbol to the face of the instrument, and they must stay visible in the recorded copy.
The DFA’s Miscellaneous Tax Section handles the stamps and the related forms: the Affidavit of Compliance, the RET Stamp Purchase Form and the Transfer Stamp Change Request for correcting a stamp with wrong information. Your title company usually buys the stamp and records it with the deed.
When no tax is due but the transfer isn’t obviously exempt, § 26-60-107(b) requires an affidavit signed by the grantee or the grantee’s agent. That’s the Affidavit of Compliance, and it goes with the deed to the recorder.
Arkansas taxes only the real estate, not the personal property
Arkansas’s transfer tax is based solely on consideration for the land and buildings. Section 26-60-105(c) says the tax isn’t levied on consideration for tangible or intangible personal property, and when a sale includes both, the tax is based only on the real estate.
That matters on an apartment sale. Appliances, furniture in furnished units, laundry equipment, maintenance vehicles and tools are tangible personal property. Contracts, leases, the property name and goodwill are intangible. If your contract allocates part of the price to those items with a bill of sale, that part isn’t subject to transfer tax.
Keep the allocation realistic. It should match what the buyer will use for depreciation, and a cost segregation study or appraisal is good support. An inflated personal property number can create problems with the county assessor and the IRS that cost more than the transfer tax saved.
Exemptions from the Arkansas transfer tax
Arkansas’s exemption list in Ark. Code § 26-60-102 is more investor-friendly than most. Several items apply directly to apartment owners.
- Transfers between business entities, or between an entity and its owner, connected with organization, reorganization, merger, consolidation, capitalization, distribution of assets or liquidation.
- Instruments given in a judicial or nonjudicial foreclosure when the property goes to the party enforcing the security interest.
- Deeds given to a secured party to avoid a foreclosure, such as a deed in lieu.
- Instruments given only to secure a debt, like a mortgage or deed of trust.
- Corrections of a previously recorded deed when full tax was paid the first time.
- Instruments conveying only a leasehold interest.
- Transfers between divorcing spouses as a division of marital property.
- Beneficiary deeds under § 18-12-608.
- Transfers to or from the United States, Arkansas or their agencies and political subdivisions.
LLC transfers, gifts, inheritance and 1031 exchanges
Moving your building into an LLC you own, or out of one at liquidation, fits the business entity exemption in § 26-60-102. You’ll still file the paperwork the recorder needs, but no stamp is required for the transfer itself.
Gifts and inheritances usually owe nothing because the tax only applies when consideration exceeds $100. A beneficiary deed is exempt by name, and property passing through an estate with no payment generally has no consideration to tax.
A 1031 exchange isn’t exempt. The sale of your relinquished property and the purchase of your replacement are both taxable transfers, so budget $3.30 per $1,000 on each Arkansas deed, split however your contracts say.
Worked example: transfer tax on a $2M and $5M Arkansas apartment sale
Take a 32-unit building in Little Rock selling for $2,000,000. The base tax is $2,000,000 ÷ $1,000 × $1.10, or $2,200, and the additional tax is $2,000,000 ÷ $1,000 × $2.20, or $4,400. Total transfer tax is $6,600. Under the default split, the seller pays $3,300 and the buyer pays $3,300.
Now say the contract allocates $50,000 of the price to appliances and other personal property. The taxable consideration falls to $1,950,000, and the tax is $6,435, a savings of $165.
At $5,000,000, the tax is $16,500, or $8,250 per side. If $100,000 is allocated to personal property, the taxable consideration is $4,900,000 and the tax is $16,170.
| Sale | Taxable consideration | Total tax | Seller’s half |
|---|---|---|---|
| $2,000,000 | $2,000,000 | $6,600 | $3,300 |
| $2,000,000 with $50,000 personal property | $1,950,000 | $6,435 | $3,217.50 |
| $5,000,000 | $5,000,000 | $16,500 | $8,250 |
| $5,000,000 with $100,000 personal property | $4,900,000 | $16,170 | $8,085 |
Arkansas transfer tax compared with neighboring states
Arkansas’s 0.33% sits in the middle of its region. Tennessee is slightly higher at $0.37 per $100, Oklahoma is lower at $0.75 per $500, and Texas, Missouri and Mississippi have no state transfer tax.
For an Arkansas owner trading into Texas or Missouri, the replacement deed won’t carry a state transfer tax. Trading into Tennessee, the buyer pays that state’s 0.37% under Tenn. Code § 67-4-409.
| State | Rate on a deed | As a percentage |
|---|---|---|
| Arkansas | $3.30 per $1,000 | 0.33% |
| Tennessee | $0.37 per $100 | 0.37% |
| Oklahoma | $0.75 per $500 | 0.15% |
| Texas | No state transfer tax | 0% |
| Missouri | No state transfer tax | 0% |
| Mississippi | No state transfer tax | 0% |
Transfer tax checklist for an Arkansas apartment sale
Three decisions set your Arkansas transfer tax before closing: who pays, what the taxable consideration is, and whether an exemption applies. Settle each one in writing so the stamp matches the deal.
- Write the split into the letter of intent and the purchase agreement, or accept the 50/50 default in § 26-60-106.
- Agree on a supported allocation of the price between real estate and personal property, and document it with a bill of sale.
- Make sure the stamp amount matches the final price after any credits or price changes; the DFA can issue a corrected stamp if it doesn’t.
- If you’re restructuring into or out of an LLC first, confirm the business entity exemption fits and have the Affidavit of Compliance ready.
- In a 1031 exchange, give your qualified intermediary the transfer tax figure so the closing statement and exchange accounting agree.
How transfer tax fits into your total selling costs
Even at 0.33%, Arkansas’s transfer tax is one of the smaller costs of selling. Federal capital gains tax of up to 20%, depreciation recapture of up to 25% and the 3.8% net investment income tax all apply to the gain, and Arkansas taxes part of your capital gain as income.
A 1031 exchange can defer the federal and Arkansas income tax, and an installment sale or seller financing can spread it over several years. Have your CPA run the after-tax numbers with the closing statement, since the right structure saves far more than any transfer tax planning.
Selling your Arkansas apartment building to Skyline
Skyline Capital Investments buys apartment buildings with five or more units across Arkansas, including Little Rock, Fayetteville, Bentonville, Rogers, Fort Smith and Jonesboro. We buy directly, can offer seller-carry terms and can close inside 1031 exchange deadlines.
Send us the property address and unit count through the form on this page, or call (469) 660-2977. We typically respond within 48 hours, and our offer states how the transfer tax and other closing costs are split.
