Does Iowa have a real estate transfer tax?
Yes. Iowa Code chapter 428A imposes a tax on each deed, instrument or writing that conveys Iowa real estate. When there is consideration and the property is worth more than $500, the tax is 80 cents for each $500, or fraction of $500, above the first $500. The Iowa Code 2026 text carries that rate unchanged.
In percentage terms that is 0.16%, or $1.60 per $1,000, with the first $500 excluded. It is one of the lower transfer taxes in the Midwest, but it is not zero, and on a $5,000,000 building it comes to almost $8,000.
Iowa’s tax is a single statewide rate. Counties and cities do not levy their own transfer taxes. The county recorder collects the state tax, keeps 17.25% of the receipts for the county general fund and sends 82.75% to the Department of Revenue.
How the Iowa transfer tax is calculated
Subtract $500 from the consideration, divide by 500, round any fraction up to the next whole number and multiply by $0.80. A $1,000,000 sale works out to 1,999 units and $1,599.20 of tax.
Consideration means the full actual sale price, paid or to be paid, including any mortgage or lien the buyer assumes. Iowa does not let you deduct an assumed loan the way Illinois does. Personal property is different. The price is presumed to include personal property unless the deed or other instrument states its dollar value, and when it does, that amount is deducted before the tax is figured. If you are selling appliances, furniture or equipment with the building, put a supportable value on the instrument.
Who pays the transfer tax in Iowa?
The seller. Iowa Code 428A.3 makes the person who grants, assigns, transfers or conveys the property liable for the tax, and the seller normally pays it at closing. A buyer can agree to reimburse it, but if the tax goes unpaid, the liability stays with the grantor.
Payment is made to the county recorder in the county where the property sits, and the amount paid appears on the face of the recorded deed. The recorder will refuse to record a taxable deed until the tax is paid. A declaration of value, signed by at least one seller or buyer or their agent, goes in with the deed, and the recorder passes it to the assessor for the state’s sales ratio study. Knowingly failing to pay the tax, or putting false information on the declaration, is a simple misdemeanor.
Contract sales and seller financing in Iowa
Iowa treats installment contracts differently from deeds, which matters if you plan to carry paper. Iowa Code 428A.2(1) exempts any executory contract for the sale of land under which the buyer takes possession, along with assignments and cancellations of that contract.
The tax comes later. When the buyer pays off the contract and you deliver the deed in fulfillment, that deed is the taxable instrument. A declaration of value is not required with a deed given in fulfillment of a recorded real estate contract, as long as the deed carries a notation saying so. If you sell with a deed and take back a mortgage instead, the tax is due at closing on the full price.
Exemptions for investors: LLCs, foreclosures and 1031 exchanges
When there is no consideration, Iowa charges no tax, so a deed that moves a building into your own LLC for no consideration is not taxed. Iowa also exempts transfers in a corporate or LLC merger, consolidation or reorganization when the deed says so on its face, and deeds between a family entity and its owners when the entity is formed or dissolved for no consideration other than shares or debt securities.
Chapter 428A taxes deeds and instruments that convey realty. It has no controlling-interest provision, so a sale of membership interests in an LLC that owns Iowa real estate, with no deed, falls outside the tax as written. Lenders and title insurers will still have their own requirements.
A 1031 exchange is not exempt. The relinquished sale is a deed for consideration like any other, and the tax is due when it records.
- Deeds giving property back to a lienholder in lieu of forfeiture or foreclosure.
- Deeds where the consideration is $500 or less.
- Deeds that confirm, correct, modify or supplement an earlier deed without added consideration.
- Deeds between spouses or between parent and child without actual consideration.
- Distributions to heirs or devisees under a will, and trust distributions to beneficiaries without consideration.
- Tax deeds, mortgages and releases, leases, and deeds that only transfer easements.
Worked example: Iowa transfer tax on a $2,000,000 and $5,000,000 sale
Take a 24-unit building in Des Moines that sells for $2,000,000 and a 60-unit complex in Cedar Rapids that sells for $5,000,000. Neither sale includes personal property, and the seller’s loans are paid off at closing.
At $2,000,000, the taxable amount above the first $500 is $1,999,500. Divided by 500, that is 3,999 units, and 3,999 × $0.80 = $3,199.20.
At $5,000,000, the amount above $500 is $4,999,500, or 9,999 units. The tax is 9,999 × $0.80 = $7,999.20. There is no county or city line to add on either sale.
| Line item | $2,000,000 sale | $5,000,000 sale |
|---|---|---|
| Consideration above the first $500 | $1,999,500 | $4,999,500 |
| Units of $500 (rounded up) | 3,999 | 9,999 |
| State transfer tax at $0.80 per unit | $3,199.20 | $7,999.20 |
| County or city transfer tax | None | None |
| Effective rate | 0.16% | 0.16% |
| Liable party | Seller | Seller |
Iowa compared with neighboring states
Iowa sits near the low end of its region. Illinois charges slightly less outside Chicago once its county tax is included, South Dakota charges less, and Minnesota and Nebraska charge roughly twice Iowa’s rate.
Nebraska’s rate is worth a second look if you are exchanging west. Its statute now sets the documentary stamp tax at $3.32 per $1,000 for transfers before January 1, 2032, falling to $2.32 per $1,000 after that, and the tax is imposed on the grantor. On a $5,000,000 Omaha building, the current rate comes to $16,600, against $7,999.20 in Iowa.
| State | Statewide tax | $2,000,000 sale |
|---|---|---|
| Iowa | $0.80 per $500 over the first $500 (0.16%) | $3,199.20 |
| Illinois (outside Chicago) | 0.10% state + 0.05% county | $3,000 |
| Minnesota | Deed tax of 0.33% | $6,600 |
| Nebraska | $3.32 per $1,000 (0.332%) | $6,640 |
| South Dakota | $0.50 per $500 (0.10%) | $2,000 |
Stating personal property on the deed
The personal property rule is the one place an Iowa seller can lawfully trim the tax, and only by stating real numbers. Suppose the $5,000,000 Cedar Rapids sale includes $100,000 of appliances, laundry equipment and furniture, and the deed states that value.
The taxable consideration becomes $4,900,000. Above the first $500 that is $4,899,500, or 9,799 units, and the tax is 9,799 × $0.80 = $7,839.20. The saving is $160. It is small at Iowa’s rate, so the main reason to list personal property is accuracy on the declaration of value, not the tax.
What to have ready for an Iowa apartment sale
Iowa closings move quickly when the recorder has everything it needs on the first submission.
- The full consideration figure, plus any personal property value you plan to state on the deed.
- A signed declaration of value to file with the deed.
- Your lender’s payoff statement for the mortgage release.
- If the property is under an earlier real estate contract, the recorded contract details so the fulfillment deed can carry the right notation.
- A rent roll, leases, deposit schedule and trailing 12-month operating statements for the buyer.
How the transfer tax fits into your total selling costs
At 0.16%, Iowa’s transfer tax is rarely the line that decides whether a sale makes sense. Federal capital gains tax, the up-to-25% federal rate on unrecaptured depreciation and Iowa income tax on the gain are far larger on a building you have owned for years.
A 1031 exchange can defer the federal and Iowa income tax, but you still pay the transfer tax when the deed records. If you are considering a contract sale to spread out your gain, remember that the transfer tax also waits until the fulfillment deed, which can be years away.
Selling your Iowa apartment building to Skyline
Skyline Capital Investments buys apartment buildings with five or more units in Iowa and nationwide. We buy directly, can offer seller-carry terms and can close inside a 1031 exchange timeline.
Send the address and unit count through the form on this page, or call (469) 660-2977. We typically respond within 48 hours.
