What are Revenue Stamps?
Revenue stamps are adhesive stamps or markings affixed to legal documents, particularly deeds, and sometimes other real estate-related documents, to indicate that the appropriate state tax on the conveyance of real property has been paid. While federal revenue stamps have not been in use since 1968, many U.S. states have introduced their own versions to meet local tax requirements.
How Revenue Stamps Work
The stamps are purchased in advance, based on the property’s sale price or assessed value, and then affixed to the deed or other relevant documentation. Upon completion of this process, the stamped deed is recorded with local governments to finalize the transfer of ownership. This system assists in public record-keeping and enforces compliance with local tax laws applied to real estate transactions.
Examples of Revenue Stamps Usage
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Example 1: In New York, the state imposes a real estate transfer tax of $2 per $500 of consideration. For a property with a sale price of $300,000, the required revenue stamps would indicate a tax payment of $1,200.
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Example 2: In Illinois, real estate transfer tax stamps must reflect $0.75 per $500 for the state and an additional local city/county tax depending on the jurisdiction. Thus, for a $500,000 property, the stamps would display a base state tax of $750.
Frequently Asked Questions (FAQs)
What is the purpose of revenue stamps?
Revenue stamps serve as proof that a state tax, usually a deed transfer tax or similar, has been paid in connection with the transfer of real property. This helps assure the legality of real estate transactions and facilitates proper record-keeping.
Are federal revenue stamps still in use?
No, federal revenue stamps have not been required since 1968. Currently, individual states implement their own versions of revenue stamps.
How is the value of revenue stamps determined?
The value of revenue stamps is pegged to the sale price of the property or its assessed value. Specific rates and calculations vary by state.
Are revenue stamps required for all real estate transactions?
Revenue stamps are typically required for most, but not all, real estate transactions, depending on state-specific tax laws. Certain exemptions may apply, such as transfers within a family.
Where can I purchase revenue stamps?
Revenue stamps can typically be purchased through designated state offices, authorized outlets, or sometimes through the office of the recorder of deeds where the transaction will be officially documented.
Related Terms with Definitions
- Deed Transfer Tax: Also known as conveyance tax, this is a tax imposed on the transfer of title to real estate.
- Real Estate Transfer Tax: A tax paid when property is sold or otherwise transferred to a new owner.
- Recording Fees: Fees paid to a governmental entity to record the deed and the transaction in public records.
- Documentary Stamp Tax: A tax imposed on certain documents, including deeds, when they are filed as per the requirements of the local government.
- Affidavit of Consideration: A statement detailing the consideration paid for the property, often required to accompany the deed during tax assessment.
Online Resources
- National Association of Realtors (NAR): NAR’s Various State Real Estate Transfer Taxes Guide
- Internal Revenue Service (IRS): Real Estate Report Instructions
References
- “Guide to Real Estate Transfer Taxes” by National Association of Realtors.
- State-specific tax codes and guidelines from state revenue departments.
Suggested Books for Further Studies
- Real Estate Transfer, Finance, and Development: Cases and Materials by Gerald Korngold and Paul Goldstein.
- Property Taxes and Local Government Finance edited by Wallace E. Oates.
- The Law of Property by Herbert Hovenkamp and Sheldon F. Kurtz.
Real Estate Basics: Revenue Stamps Fundamentals Quiz
