Does Minnesota have a real estate transfer tax?
Yes. Minnesota calls it the deed tax, and it is imposed by Minnesota Statutes section 287.21. The rate is 0.0033 of the net consideration, or 0.33%, on any deed or instrument conveying Minnesota real property for more than $3,000. Transfers of $3,000 or less, and a few special categories, pay a flat $1.65.
Hennepin County, which includes Minneapolis, and Ramsey County, which includes St. Paul, add an Environmental Response Fund tax of 0.0001 under sections 383B.80 and 383A.80. That brings the total in those two counties to 0.34%. Everywhere else, the rate is 0.33%.
There are no price tiers and no separate rate for commercial or apartment property. A fourplex and a 300-unit complex pay the same percentage.
How Minnesota calculates the deed tax: net consideration
The base is net consideration, which section 287.20 defines as the consideration reduced by the amount outstanding under any lien that existed before the sale and is not paid off or released by it. In plain terms, the price minus any existing mortgage the buyer takes over.
That rule rarely matters on a typical sale, because most sellers pay off their loan at closing and the full price is taxed. It matters a lot when a buyer assumes an existing low-rate agency loan, which is more common on apartment buildings than on houses. The assumed balance comes out of the taxable amount.
Who pays the deed tax in Minnesota?
The seller, by custom. Section 287.21 doesn’t name a payer. It says the tax is due when the deed is presented for recording, and Minnesota purchase agreements normally put the deed tax on the seller. As with any closing cost, a contract can shift it.
The tax is paid to the county where the property sits, usually by the title company out of the seller’s proceeds at recording. The Minnesota Department of Revenue administers it, and counties collect it.
The buyer has a separate cost: the mortgage registry tax. Section 287.035 sets it at 0.0023 of the debt secured by a recorded Minnesota mortgage, so a buyer financing $3,500,000 pays $8,050. Sellers don’t pay it, but buyers count it against what they can offer.
The eCRV and other filings at a Minnesota closing
Every Minnesota sale for more than $3,000 needs a Certificate of Real Estate Value under section 272.115. It is filed with the county auditor when the deed is presented for recording, almost always electronically as an eCRV through the Department of Revenue’s system. The grantor, the grantee or their agent can file it.
The eCRV reports the price, the terms and any personal property in the sale. For an apartment building, list furniture, appliances and other personal property you are transferring, since that portion is generally not real property consideration. Your title company and CPA should agree on the allocation, because it also affects depreciation for the buyer.
Entity transfers and the designated transfer rule
Minnesota’s deed tax attaches to deeds and other instruments presented for recording. Minnesota has no general controlling-interest transfer tax, so selling the membership interests of an LLC that owns a building generally records no deed and owes no deed tax.
Moving property between related parties gets a special rate. Section 287.20 defines five designated transfers, which pay the flat $1.65 instead of 0.33%:
- Between a single-owner entity and its owner.
- Between an entity owned only by one or both spouses and those spouses.
- Between a co-owned entity and all its co-owners, if each keeps the same percentage interest in the property.
- Between a revocable trust and its grantor or grantors.
- A transfer of substantially all assets in a qualifying reorganization.
The six-month look-back on designated transfers
Minnesota closed the obvious loophole. Under section 287.21, if an ownership interest in the grantee entity is transferred within six months after a designated transfer, the full 0.33% can apply to that designated transfer. Involuntary transfers don’t count.
Here is what that stops. An owner deeds a $5,000,000 building into a new LLC for $1.65, then sells 100% of that LLC to a buyer two months later. The look-back puts the $16,500 of deed tax back on the table, plus the Hennepin or Ramsey add-on if the building is there. If you restructure ownership before a sale, do it well ahead of a listing, and have your title company or CPA confirm the timing.
Several other recordings are exempt outright under section 287.22, including a sheriff’s certificate of sale in a mortgage foreclosure, a deed of distribution by a personal representative and a transfer on death deed. A 1031 exchange is not exempt: the sale of your relinquished building pays the full deed tax.
Worked example: deed tax on a $2M and $5M Minnesota apartment sale
Take a 24-unit building in Minneapolis sold for $2,000,000 with the seller’s loan paid off at closing. The deed tax is $2,000,000 × 0.0033 = $6,600, and the Hennepin Environmental Response Fund tax is $2,000,000 × 0.0001 = $200. The seller pays $6,800.
The same building in Rochester, in Olmsted County, pays only the $6,600 deed tax. A smaller 12-unit building in Duluth selling for $1,500,000 pays $4,950, with no county add-on because St. Louis County is outside the two metro counties that levy it.
At $5,000,000 in St. Paul, the deed tax is $16,500 and the Ramsey add-on $500, for $17,000. If the buyer assumes a $3,000,000 loan that stays on the property, net consideration falls to $2,000,000 and the total to $6,800, a saving of $10,200.
| Sale | Deed tax (0.33%) | County ERF tax (0.01%) | Total |
|---|---|---|---|
| $2M, Minneapolis (Hennepin) | $6,600 | $200 | $6,800 |
| $2M, Rochester (Olmsted) | $6,600 | $0 | $6,600 |
| $5M, St. Paul (Ramsey) | $16,500 | $500 | $17,000 |
| $5M, St. Paul, $3M loan assumed | $6,600 | $200 | $6,800 |
Minnesota deed tax compared with neighboring states
Minnesota is in the middle of its region. Wisconsin’s transfer fee is 30 cents per $100, or 0.3%, on the grantor, almost the same as Minnesota. Iowa charges 80 cents for each $500 above the first $500, about 0.16%. South Dakota’s fee is 50 cents per $500, or 0.1%, paid by the grantor.
If you are exchanging out of a Minnesota building and buying in one of these states, the difference on the next sale is modest. On $5,000,000, Iowa would charge about $8,000 against Minnesota’s $16,500.
| State | Rate | Notes |
|---|---|---|
| Minnesota | 0.33% | 0.34% in Hennepin and Ramsey counties |
| Wisconsin | $0.30 per $100 (0.3%) | Imposed on the grantor |
| Iowa | $0.80 per $500 (0.16%) | First $500 excluded |
| South Dakota | $0.50 per $500 (0.1%) | Paid by the grantor |
How the deed tax fits into your total selling costs
At 0.33%, the deed tax is one of the smaller costs of a Minnesota sale. The bigger ones are federal capital gains tax, recapture of depreciation taken over the years, the 3.8% net investment income tax for many owners and Minnesota income tax, which treats capital gains as ordinary income at the state’s graduated rates.
That last point gives Minnesota sellers more reason than most to look at a 1031 exchange or an installment sale. Neither changes the deed tax, but either can defer far larger amounts. A seller-carry note, for example, spreads the gain over the years you collect principal.
Seller financing has one Minnesota wrinkle. If the buyer gives you a mortgage to secure the note and it is recorded, the 0.23% mortgage registry tax applies to that debt too. On a $1,500,000 carry-back note, that is $3,450. The buyer usually pays it, but it is part of the deal’s total cost, so settle who bears it in the purchase agreement.
Put the numbers side by side before you choose a structure. A clean cash sale at $2,000,000 in Minneapolis costs $6,800 in deed tax. The same sale with a buyer assumption of your loan can cost a fraction of that, and a carry-back note adds mortgage registry tax but can lower the income tax you owe this year. Your title company can run each version on a draft settlement statement in a few minutes.
Selling your Minnesota apartment building to Skyline
Skyline Capital Investments buys apartment buildings with five or more units throughout Minnesota, from the Twin Cities and their suburbs to Rochester, St. Cloud and Duluth. We buy directly, can offer seller-carry terms, and can work inside a 1031 timeline.
Send the address and unit count through the form on this page, or call (469) 660-2977. We typically respond within 48 hours. If an assumable loan is in place, tell us, because it can change both your deed tax and the price math. We’ll show the deed tax, any county add-on and your other closing costs on separate lines so your net is clear.
