What is the transfer tax in Georgia?
Georgia imposes a real estate transfer tax under O.C.G.A. 48-6-1 on each deed, instrument or other writing that conveys real property to a buyer. The rate is $1 for the first $1,000 or fraction of $1,000, plus 10 cents for each additional $100 or fraction of $100. That’s 0.1% of the taxable amount, rounded up to the next $100.
The tax applies only when the consideration or value exceeds $100. The taxable amount is the consideration or value of the property, exclusive of any lien or encumbrance that existed before the sale and isn’t removed by it. That exclusion is unusual and worth knowing: if a buyer takes title subject to your existing loan, the loan balance comes out of the taxable amount.
There’s no separate county or city transfer tax in Georgia. The state tax is collected by the clerk of superior court in the county where the deed is recorded, and the clerk distributes it among the state, the county and its municipalities. A building in Atlanta, Savannah or a rural county pays the same rate.
Who pays transfer tax in Georgia?
The seller, by default. The Georgia Department of Revenue says the tax must be paid by the person who executes the deed or the person for whose benefit it’s executed, and that the seller is liable, though the parties frequently agree in the sales contract that the buyer will pay.
On a 0.1% tax, the question rarely decides a deal. It’s one of the smallest lines on a Georgia closing statement for a building of any size, so spend your negotiating energy on price, timing and the buyer’s financing instead.
Form PT-61 and when the tax is paid
The tax has to be paid before the deed can be recorded. Each conveyance needs a Real Estate Transfer Tax Declaration, Form PT-61, which is filed electronically through the Georgia Superior Court Clerks’ Cooperative Authority. Once the tax is paid, the clerk attaches a certification to the deed, and only then does it go on record.
To claim an exemption, the PT-61 still has to show the total consideration for the real and personal property conveyed, under O.C.G.A. 48-6-2(b). Questions about whether a transfer is taxable go to the clerk of superior court in the county, not to the Department of Revenue.
Exemptions that matter to investors
O.C.G.A. 48-6-2(a) lists the instruments that owe no transfer tax. The ones Georgia apartment owners use:
- Transfers from individual owners to a corporation, partnership or other entity, or from the entity back to them, when those individuals hold a majority ownership interest in the entity. That covers deeding a building into your own LLC.
- Deeds to secure debt, which is how Georgia lenders take a security interest.
- Deeds of gift.
- Deeds in lieu of foreclosure, but only if the purchase-money security deed was executed and recorded at least 12 months before the deed in lieu is recorded.
- The deed from the debtor to the first transferee at a foreclosure sale.
- Distributions by an executor, administrator, trustee or guardian made without valuable consideration, and divisions of property among joint tenants or tenants in common where no other consideration is paid.
LLC sales and 1031 exchanges in Georgia
Georgia’s transfer tax attaches to a deed or other writing that conveys realty. A sale of the membership interests in the LLC that owns your building conveys no realty and records no deed, so it doesn’t trigger the tax. Georgia has no controlling-interest transfer tax like Connecticut’s or Delaware’s entity rule.
At 0.1%, though, there’s little reason to sell the entity to save transfer tax. On a $5,000,000 building the whole tax is $5,000, and buying an entity brings its old liabilities with it, which most buyers won’t accept to save that much.
A 1031 exchange isn’t on the exemption list, so the deed for the building you sell and the deed for your replacement each pay the tax. The exchange still defers federal and Georgia income tax on the gain, which is where the real money is.
The two Georgia taxes that cost more than the transfer tax
First, the intangible recording tax. When the buyer records a security deed for a long-term note, Georgia charges $1.50 for each $500 of the note’s face amount, or 0.3%, up to $25,000 per note. The Department of Revenue says the lender pays it to the collecting officer when the security instrument is recorded and may pass it on to the borrower. On a $1,400,000 loan, it’s $4,200, more than double the transfer tax on a $2,000,000 sale.
Second, nonresident withholding. Under O.C.G.A. 48-7-128, a buyer generally must withhold 3% of the purchase price when the seller is a nonresident, unless the seller qualifies as a resident by affidavit or another exception applies. A seller can instead give the buyer a sworn affidavit of the gain to be recognized, and the buyer withholds 3% of the gain. Withholding is capped at the seller’s net proceeds.
A partnership, S corporation or other unincorporated organization that certifies it files a composite return and remits tax for its nonresident owners can avoid withholding. The buyer remits any withholding by the last day of the month after the sale.
Worked example: Georgia transfer tax on a $2M and $5M apartment building
Take a 24-unit building in metro Atlanta selling for $2,000,000. The first $1,000 is $1. The remaining $1,999,000 is 19,990 units of $100 at 10 cents each, or $1,999. The transfer tax is $2,000.
At $5,000,000, the same math gives $1 plus 49,990 times 10 cents, or $5,000.
Now say the buyer takes title subject to your existing $1,200,000 loan on the $2,000,000 sale. The lien isn’t removed by the sale, so it’s excluded, and the tax applies to $800,000: $1 plus 7,990 times 10 cents, or $800.
If you’re a nonresident individual, the buyer withholds 3% of the $2,000,000 price, or $60,000, unless you qualify for an exemption. With a sworn affidavit showing a recognized gain of $900,000, withholding drops to 3% of the gain, or $27,000.
| Scenario | Taxable amount | Transfer tax |
|---|---|---|
| $2,000,000 sale, loan paid off | $2,000,000 | $2,000 |
| $5,000,000 sale, loan paid off | $5,000,000 | $5,000 |
| $2,000,000 sale subject to existing $1,200,000 loan | $800,000 | $800 |
| Buyer’s $1,400,000 loan: intangible recording tax | $1,400,000 | $4,200 |
| Nonresident withholding at 3% of $2,000,000 price | n/a | $60,000 withheld |
| Nonresident withholding at 3% of a $900,000 gain | n/a | $27,000 withheld |
Georgia transfer tax compared with neighboring states
Georgia ties Alabama for the lowest deed tax in its neighborhood. Florida charges seven times as much at 0.70%. Tennessee’s realty transfer tax is 37 cents per $100, and North Carolina charges $1 per $500, paid by the transferor.
For owners trading Georgia property into a Florida building, that gap is real money: the replacement deed for a $2,000,000 Florida purchase carries $14,000 in stamps, seven times what you paid to sell in Georgia.
| State | Rate | On a $2,000,000 sale |
|---|---|---|
| Georgia | $1 per $1,000 (0.1%) | $2,000 |
| Alabama | $0.50 per $500 (0.1%) | $2,000 |
| North Carolina | $1 per $500 (0.2%) | $4,000 |
| Tennessee | $0.37 per $100 (0.37%) | $7,400 |
| Florida | $0.70 per $100 (0.70%) | $14,000 |
How the transfer tax fits into your Georgia selling costs
For a Georgia apartment seller, the transfer tax is close to a rounding error. Federal capital gains tax, depreciation recapture at up to 25%, the 3.8% net investment income tax for higher earners and Georgia income tax on the gain make up most of the tax bill, and prepayment penalties or defeasance on the existing loan can be larger still.
A 1031 exchange defers the income taxes, and a nonresident seller doing an exchange should sort out the Georgia withholding affidavit early so 3% of the price isn’t held back at closing. Have your closing attorney or CPA prepare the affidavit and the PT-61 together, along with the payoff letter, before you set a closing date.
Selling your Georgia apartment building to Skyline
Skyline Capital Investments buys apartment buildings with five or more units across Georgia, from metro Atlanta to Savannah, Augusta and Macon. We buy directly, can offer seller-carry terms, and work within 1031 exchange deadlines.
Send the property address and unit count with the form on this page, or call (469) 660-2977. We typically respond within 48 hours, and our offer will lay out the transfer tax, any withholding and your other closing costs so you know your net before you sign.
