Tax Implications of Closing and Transfer

Key Takeaways

• Transfer taxes range from 0% to 4%+ of purchase price depending on jurisdiction—model them precisely in closing cost projections.
• Property tax reassessment on transfer can dramatically increase taxes—never use the seller's current tax bill in the pro forma without adjustment.
• Cost basis allocation between land and improvements directly impacts depreciation deductions and after-tax returns.
• Cost segregation studies can accelerate depreciation from 27.5-year to 5-15 year classes, significantly increasing first-year tax benefits.