New Hampshire Real Estate Transfer Tax Explained: Rates, Exemptions, and Reporting Rules

Overview

New Hampshire imposes a real estate transfer tax (RETT) on most transfers of real property or interests in real property.

The law appears in RSA 78-B, and the accompanying administrative rules are in N.H. Code Admin. R. Rev 800.

Payment occurs when the deed or other transfer instrument is recorded at the registry of deeds, and the amount of tax paid is shown on the stamp affixed to the deed.

The RETT applies not only to standard property sales but also to long-term leases, foreclosures, transfers by operation of law, and changes in ownership of entities - such as LLC membership transfers - when those entities hold real estate.

Historical Background

The modern New Hampshire transfer tax originated in 1967 and took effect on January 2, 1968. The initial rate was $1 per $1,000 of consideration, payable only by the purchaser.

The timing was no coincidence. That same year, Congress repealed the federal documentary stamp tax, which had long required stamps on deeds as proof of payment of a federal excise tax. When the federal tax disappeared, New Hampshire chose to continue the practice at the state level, keeping a familiar mechanism while diverting revenue to its own treasury.

Current Tax Rate and Who Pays

Today, both the buyer and seller share liability. Each pays $7.50 per $1,000 of consideration, for a combined total of $15 per $1,000 - fifteen times higher than the original rate.

The minimum tax is $40 total ($20 per party) for transactions valued under $4,000.

For tax purposes, “consideration” generally means fair market value, which may include the purchase price plus any mortgages, liens, or unpaid taxes assumed by the buyer.

Strategies to Avoid or Reduce the Transfer Tax

As with many taxes, businesses and individuals often look for ways to minimize their transfer-tax exposure.  Some methods are legitimate; others are not.

How about transferring a membership interest in an LLC that owns real estate?  Membership interests are personal property and transfers are not recorded publicly, yet the LLC will still own the real estate.  Alas, the parties must report those transactions and pay the tax.  The amount is prorated based on the percentage of the membership interest being transferred, assuming the percentages correspond to fair market value. 

But here are two methods to consider:

1. Allocating the Purchase Price Among Asset Classes

In transactions that include more than just real estate, such as furniture and equipment, or intangible assets like goodwill and customer lists, parties may allocate the price among asset classes.

Only the portion representing real estate value is subject to the transfer tax, and accurate allocation can reduce the amount owed.

2. Using Statutory Exemptions

RSA 78-B:2 lists numerous exempt transactions, including:

·        Gifts and other non-contractual transfers

·        Transfers to or from revocable trusts

·        Transfers into or out of entities when actual ownership percentages remain unchanged

·        Entity conversions, such as from corporation to LLC

·        Mortgages or other financing instruments

·        Inheritances and devise by will

·        Transfers to government entities

·        Transfer-on-death deeds

Many exemptions carry specific conditions. Even when the tax does not apply, reporting obligations may still exist, so parties should review both the statute and the administrative rules carefully.

Required Reporting Forms

Most real estate transfers in New Hampshire require two filings:

1.     Form PA-34 - Inventory of Property Transfer

Must be filed within 30 days of recording a deed.

It notifies both the Department of Revenue Administration (DRA) and the local assessor of a change in ownership, whether or not the transfer is taxable.

2.     Form CD-57 -  Declaration of Consideration (Purchaser and Seller Versions)

Required whenever the transfer is taxable under RSA 78-B.

Both the buyer and seller must file their respective Declarations of Consideration with the DRA within 30 days after the transfer or recording.

This form reports the amount of consideration and provides the basis for calculating the tax due.

In short, the PA-34 informs the government about the transaction, while the CD-57 determines and documents the amount of tax owed.

Practical Issues and Common Pitfalls

The RETT often surfaces in transactions that do not look like traditional sales - deeds in lieu of foreclosure, related-party transfers, or ownership restructurings.

Because the tax is based on fair market value, not simply the contract price, liens, debts, and encumbrances can increase the taxable amount.

Special exemptions exist for certain low-income housing projects and other narrowly defined circumstances.

For assistance with real estate or business transactions, please contact Alfano Law at (603) 856-8411 or by filling out our Contact Form.  The firm offers free or low-cost initial consultations for most matters.