What is the South Dakota transfer tax rate?
The rate is 50 cents for each $500 of value or fraction of $500, set by SDCL 43-4-21. That is $1 per $1,000, or 0.1% of the price. South Dakota calls it a real estate transfer fee rather than a tax, but it works like the deed taxes in other states: it is charged on the privilege of transferring title to real property in the state.
The phrase “or fraction thereof” matters on odd prices. Every partial $500 counts as a full one, so a $2,150,250 sale is 4,301 units of $500 and the fee is $2,150.50, not $2,150.25.
The fee is charged on value, and the register of deeds collects it based on the value declared when the deed is offered for recording, under SDCL 43-4-24. The register also writes the amount of the fee on the face of the deed after it is recorded, so the figure becomes part of the public record.
Who pays the transfer fee in South Dakota?
The seller does. SDCL 43-4-21 says the fee “shall be paid by the grantor,” which is unusual language for a transfer statute, since many states leave the payer to custom. In practice the seller’s share shows up as a line on the seller side of the closing statement.
A buyer and seller can still agree in the purchase contract that the buyer will reimburse the fee or that the price will be adjusted for it. That changes who bears the cost, not who the statute charges, and on a 0.1% fee it is rarely worth a long negotiation.
When and where the fee is paid
The fee is paid at recording, to the register of deeds in the county where the building sits. Your title company or closing attorney usually collects it from the seller’s proceeds and pays it with the recording fees. The proceeds go to the county general fund under SDCL 43-4-25, even though the rate is set by state law.
Every deed or contract for deed used in a sale must be accompanied by a certificate of value under SDCL 7-9-7. The certificate lists the buyer and seller, the legal description, the actual consideration, any relationship between the parties and the payment terms if the price is not paid in full at closing. If you are carrying back financing for the buyer, those terms go on this certificate.
Accuracy matters. Under SDCL 43-4-26, intentionally falsifying the value or claiming an exemption you know does not apply, in order to pay too little, is a Class 1 misdemeanor.
- Fee: 50 cents per $500 of value or fraction, paid by the seller.
- Recording fee: $30 for the first 50 pages of a deed, then $2 per extra page (SDCL 7-9-15).
- Certificate of value: required with every sale deed or contract for deed (SDCL 7-9-7).
Are there county or city transfer taxes in South Dakota?
No separate county or city transfer tax is set out in the transfer fee chapter. The one statewide rate applies in Sioux Falls, Rapid City and every other county, and the county keeps the money. What does vary is the size of the deed package, since recording fees are charged by the document and by page count.
That simplicity is worth something in a sale. In states with local add-ons, such as Philadelphia or Chicago, the local tax can be several times the state rate. In South Dakota the figure you calculate from the statute is the figure you pay.
Exemptions that matter to apartment owners
SDCL 43-4-22 lists 19 exempt transfers. Any deed that relies on one must carry the words “exempt from transfer fee” and cite the subdivision being claimed, under SDCL 43-4-23. The ones investors use most are below.
- LLCs and their members: subdivision 19 exempts any transfer between a limited liability company and its members, so deeding a building into your own LLC, or out of it to the members, carries no fee.
- Corporations and partnerships you control: subdivisions 11 and 14 exempt transfers between individuals and a corporation or partnership when the grantors and the majority owner are the same person.
- Mergers and reorganizations: subdivision 8 covers mergers or consolidations of corporations or LLCs and plans of reorganization that move substantially all of the assets.
- Dissolutions: subdivision 12 covers deeds from a corporation to its stockholders, or from an LLC to its members, when needed to dissolve the entity.
- Foreclosure and deeds in lieu: subdivision 6 exempts sheriff’s deeds, other foreclosure deeds, deeds in lieu of foreclosure and tax sale deeds.
- Estates and gifts: subdivision 10 covers decrees of distribution in a decedent’s estate, subdivision 16 covers absolute gifts between individuals, and subdivision 18 covers any transfer for which no consideration was given.
- Fiduciaries: subdivision 15 covers transfers between a fiduciary and a beneficiary, or a third party, made to accommodate the fiduciary relationship.
Entity sales and 1031 exchanges
South Dakota’s fee is tied to transferring title to real property. Nothing in SDCL 43-4-21 through 43-4-26 taxes the sale of a membership interest or stock in an entity that owns real estate, which is different from states such as Vermont, New York or Pennsylvania that tax a change in controlling interest. If a buyer purchases 100% of the LLC that holds your apartment building, the deed stays where it is and no transfer fee is triggered by the statute.
Buyers of apartment buildings usually want a deed anyway, for title insurance and lender reasons, so most sales still close with a deed and a fee.
There is no 1031 exchange exemption in SDCL 43-4-22. The relinquished property sale pays the fee like any other sale, and the replacement purchase carries whatever transfer tax its own state charges, which in South Dakota falls on the seller of that property, not on you.
Worked example: transfer fee on a South Dakota apartment building
Take a 30-unit building in Sioux Falls that sells for $2,000,000. That is 4,000 units of $500, and 4,000 × $0.50 = $2,000. A one-document deed under 50 pages adds a $30 recording fee, for $2,030 in total.
At $5,000,000 the fee is 10,000 × $0.50 = $5,000. On a price that doesn’t land on an even $500, round up first: $2,150,250 becomes 4,301 units and a $2,150.50 fee. Have your title company confirm the final figure on the settlement statement.
| Sale price | Units of $500 | Transfer fee (seller) | Deed recording fee |
|---|---|---|---|
| $2,000,000 | 4,000 | $2,000.00 | $30 |
| $2,150,250 | 4,301 | $2,150.50 | $30 |
| $5,000,000 | 10,000 | $5,000.00 | $30 |
South Dakota compared with neighboring states
South Dakota sits at the low end of its region. Montana bans real property transfer taxes in its constitution, while Minnesota and Nebraska charge roughly three times South Dakota’s rate. The table shows each state’s statewide rate and the tax on a $2,000,000 sale before local add-ons.
| State | Statewide rate | Tax on $2,000,000 |
|---|---|---|
| South Dakota | $0.50 per $500 (0.1%) | $2,000 |
| Iowa | $0.80 per $500 above the first $500 (0.16%) | $3,199.20 |
| Minnesota | 0.33% of net consideration | $6,600 |
| Nebraska | $3.32 per $1,000 (0.332%) through 2031 | $6,640 |
| Montana | None (Mont. Const. art. VIII, § 17) | $0 |
How the transfer fee fits into your total selling costs
At 0.1%, the transfer fee is almost never the cost that decides whether a sale works. South Dakota has no state income tax, so the large tax items on an apartment sale are federal: capital gains on the appreciation and depreciation recapture on the deductions you took while you owned the building.
That is where planning pays off. A 1031 exchange can defer both the federal gain and the recapture if you buy replacement property inside the 45-day identification and 180-day closing windows. The transfer fee is still due on the sale, but it is small enough that it rarely changes the exchange math.
Seller financing is another lever. Carrying part of the price can spread the federal gain over the years you receive principal, and South Dakota only asks you to report the terms on the certificate of value.
A simple way to budget: add the 0.1% fee, the recording fee, your share of title and closing charges, and any loan prepayment penalty, then set the federal tax estimate from your CPA beside them. On most South Dakota apartment sales the transfer fee ends up as one of the smallest lines on that list, which leaves your attention for the price, the terms and the timing of the exchange.
Selling your South Dakota apartment building to Skyline
Skyline Capital Investments buys apartment buildings with five or more units across South Dakota as a direct buyer. We can offer seller-carry terms, work inside your 1031 timeline and underwrite the building as it stands today.
Send the property address and unit count through the form on this page, or call (469) 660-2977. We typically respond within 48 hours.
