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Local Transfer Taxes and Private Transfer Fees

Local Transfer Taxes and Private Transfer Fees – Boulder CO Real Estate Agent

If you are working with a Colorado real estate agent and have submitted or received an offer to buy or sell a home in one of Colorado’s resort communities you may notice a portion of the contract that discusses a “local transfer tax,” which can range from 1% to 4% of the purchase price of the property, depending on the location.

In the late ‘70s some of Colorado’s mountain resort communities began adopting real estate transfer taxes to bolster specific purposes. From the start the sole purpose of Vail’s 1% real estate transfer tax has been the acquisition and maintenance of open space. In Aspen there are two RETTs totaling 1.5%, with .5% going to support the Wheeler Opera House and the remaining 1% going to support the Aspen Pitkin County Housing Authority. Funds collected from Winter Park’s 1% RETT are deposited into the Town’s General Fund. A number of other resort communities in Colorado continue to have real estate transfer taxes, including Breckenridge (1%), Frisco (1%), Gypsum (1%), Snowmass Village (1%), Minturn (1%), Avon (2%), Crested Butte (3%), Telluride (3%), and Ophir (4%). If you are a Colorado real estate broker or unrepresented party involved in a transaction in any of these cities or towns be sure to check with the local authorities to confirm this information.

Colorado communities have been prohibited from assessing new real estate transfer taxes or increasing the transfer taxes already in place since an amendment to the Colorado Constitution known as the Taxpayer’s Bill of Rights (TABOR) narrowly won passage in 1992, following several failed attempts. As a result, Colorado communities that did not have generally applicable real estate transfer taxes prior to December 31, 1992 (e.g., Silverton, Steamboat Springs, Nederland, Boulder, Denver, etc.) still do not have RETTs and will continue to not have RETTs unless the relevant provisions of TABOR are overturned by a supermajority of Coloradans (55%).

Section 15.4 of Colorado’s standard form residential real estate purchase and sale contract is drafted such that the determination of who will pay local transfer taxes (i.e., real estate transfer taxes or RETTs) is negotiable, with “check-the-box” options for “None,” “Buyer,” “Seller” and “One-Half by Buyer and One-Half by Seller.” The de facto approach in most transactions is to negotiate the purchase price with the understanding that the buyer will ultimately be responsible for payment of the transfer tax. Sometimes transfer taxes are split between the parties. On rare occasions they are paid solely by the seller.

Note that that a RETT is not the same as the .01% “documentary fee” paid to the local clerk and recorder’s office that applies to any transfer of real estate for which the sale price exceeds $500. Such documentary fees are paid, by default, by the buyer. For information on documentary fees, see C.R.S. § 39-13-101 et seq. or contact the clerk and recorder’s office for the county in which the property is located.

There is another type of fee, similar in effect to a RETT, that can be found in Denver, Boulder, Broomfield, Westminster, and other cities throughout Colorado. It is called a real estate transfer fee or a private transfer fee and is addressed specifically in Section 15.5 of the standard form, Colorado Real Estate Commission approved, Contract to Buy and Sell Real Estate (Residential). The authority to impose private transfer fees is derived not from governmental entities but from community associations (i.e., homeowners’ associations) by way of agreements called covenants that buyers take subject to when they close. Like RETTs, the determination of who pays for a private transfer fee is decided by the parties. Whether a property is subject to such a private transfer fee depends on the subdivision. If you do not know for sure whether a private transfer fee is required, it is always best to check.

Questions regarding real estate transfer taxes (RETT) and private transfer fees can require a complex, fact-specific analysis so, as with all of the information provided on this website, this is meant to be used for general educational purposes only and does not constitute legal advice. For specific information, contact an attorney. If, however, you are looking to purchase or sell real estate in Colorado and are seeking the assistance of a knowledgeable, experienced real estate agent, contact Colorado real estate broker Ashley Newell today.

If you are looking for Boulder real estate agents with a results oriented approach tailored to your specific needs, contact Royal Arch Real Estate. We are knowledgeable and experienced brokers who always have your best interests at the forefront of our minds, whether you are buying or selling a home, vacant land or a new construction.