Be Prepared to Open Your Wallet

More Expensive Homes Mean More Expensive Closing Costs

Like many states, Minnesota has a state deed tax or transfer tax, that is paid to the county treasurer every time a home sells. On top of this, if a buyer is obtaining a loan, a mortgage registry tax is also due to the treasurer.

Typically in Minnesota, the seller pays for the state deed tax of $3.30 per $1000 (since it is his property being transferred) and the buyer pays for the mortgage tax of $2.30 per $1000 (since it is his loan).

While the purchase of a home for $200,000 would only require a deed tax of $660 and a mortgage tax of $460, someone selling or buying an upper-tier priced home, will be paying a substantial amount more. In this example, let’s bump up the price to $2 Million. The homeowner will now pay $6600 to the treasurer, and the buyer, assuming he is getting a loan for the full $2 Million, will have to pay $4,600 in taxes on the mortgage.

So if you are planning to sell or buy a luxury home in Minneapolis, St Paul or on any of the lakes, make sure you are prepared in knowing what is going to come out of your pocket, other than just lender fees or repair requests. Ask your real estate agent for a break down of typical closing costs, but also remember, closing costs are all negotiable. Just because it is typical for sellers to pay for the deed tax and buyers the mortgage tax, doesn’t mean you cannot ask the other party to cover those expenses. It is a buyer’s market after all, and you’ll never know what you can get unless you ask!

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