Alabama real estate transfer tax explained
A concise guide to Alabama’s real estate transfer tax (commonly called the recordation tax): what it covers, current state rates, typical payers, common exemptions and quick examples.
What the Alabama real estate transfer tax is
Alabama’s real estate transfer tax is commonly called the recordation tax under state law and is the fee charged when instruments that affect title are recorded with county offices.[1][2]
The tax applies to a range of documents that change or affect ownership or secured interests in real property — for example, deeds and mortgages — when those instruments are entered into the public record.[1]
Because the recordation tax is assessed at the time an instrument is recorded, it typically shows up as a closing cost on transactions that transfer title or create a recorded security interest in property.[1][2]
Not every transfer is subject to the tax: state law lists certain transfers and institutions that are exempt from the recordation tax, and those specific exemptions are set out in the statutory language.[2]
In practical terms, buyers, sellers, lenders and title professionals in Alabama should plan for a recordation tax step in any transaction that requires recording a deed, mortgage or similar instrument, and they should check the department of revenue guidance and the statute for which documents and transfers are taxable or exempt.[1][2]
If you need the exact rates that apply to deeds versus mortgages or the statutory exemption text, consult the department of revenue recordation tax page and Chapter 22 of Title 40 in the Alabama Code.[1][2]
Current state rates and how they’re computed
Alabama charges two separate state recordation taxes when real estate changes hands: a deed (recordation) tax on the transfer of title and a mortgage recordation tax on recorded indebtedness. [1]
Example: on a $250,000 sale the deed tax would be calculated by dividing the sales price into $500 units (or counting each $500 or fraction as $0.50); this is the same practical math reflected in the per‑$1,000 explanation above. [3] [4]
Practical notes
- Both taxes are state charges collected at recordation; counties or municipalities may levy additional fees or stamps, so check local requirements. [1]
- When preparing closing figures, compute the deed tax on the full sales price (rounding up any fraction of the stated unit) and compute the mortgage tax on the total new indebtedness being recorded. [3] [1]
These are the statewide rates and the method used to convert property value or loan amount into the tax due. [1]
Who typically pays the tax
Who typically pays the tax
In Alabama, either the buyer or the seller can be responsible for paying the state's real estate transfer tax, which is commonly referred to as the recordation tax; local practice and the purchase contract usually determine who actually pays at closing. [5] To go further, see Alabama property tax rate: how it’s calculated and who pays.
State recordation taxes apply to different recorded instruments: when mortgages are recorded, lenders (or the party placing the mortgage) pay the mortgage recordation tax, and when property changes hands the deed recordation tax applies to the deed recorded at transfer. [1]
Practically speaking, that means on a typical home purchase the contract will spell out whether the buyer or seller covers the recordation fee for the deed, while mortgage-related recordation fees are tied to the lender and the amount of the loan. [5] [1]
Example: if a buyer takes out a mortgage to buy a house, the mortgage recording triggers the mortgage recordation tax paid with that mortgage filing; the deed recording at closing triggers the deed recordation tax, which the parties allocate by agreement. [1] [5]
Because local practice varies, always check your purchase contract and ask your closing agent which party is scheduled to pay each recordation tax so there are no surprises at closing. [5]
Common exemptions and excluded transfers
Most transfers of real property are subject to Alabama’s recordation/transfer tax, but the statute explicitly lists transactions that are excluded or treated specially. [2]
Common exemptions include transfers by or to exempt institutions and other categories the code enumerates. [2]
The Code and the Department of Revenue guidance identify specific types of instruments and transfers that are not subject to the privilege or license (recordation/transfer) tax—for example, certain transfers of mortgages and other designated instruments. [6] [1]
Because the law separates recording requirements from taxable transfers, some recordations (such as mortgages, deeds, bills of sale, or conditional sale contracts) may be subject to specific recordation rules even where the privilege tax does not apply. [1]
If you are relying on an exemption—for example, a transfer involving an exempt institution or a type of instrument listed in the statute—confirm the statutory language that describes that exclusion and keep supporting documentation with the deed or instrument to show the exemption. [2]
When in doubt, consult the Alabama Department of Revenue’s recordation tax guidance and the text of Title 40, Chapter 22 to determine whether a particular transfer or instrument is excluded from the tax. [1] [2]
Quick examples showing how much you’d pay
Quick examples showing how much you’d pay
Deed example
Mortgage example
How to read these examples
How the recordation process and payment usually work
When you take a deed, mortgage, or similar instrument to the county recorder’s office to make it part of the public record, the recordation tax is assessed at that time and collected by the office accepting the document [1]. For deeds, mortgages, bills of sale, conditional sale contracts and comparable instruments, county recording offices follow the state’s recordation rules and apply the applicable rate when they accept documents for recording [1].
In practical terms, bring the original signed instrument and the funds to cover the recordation tax to the county recorder or probate office when you submit documents for recording; the staff will calculate and collect the tax based on the instrument type and the state rate schedule [1]. If you are recording a mortgage, for example, the state’s published rate applies to the amount of indebtedness; for deeds and other instruments the office will use the rate table in state guidance when they accept and record your papers [1].
Check the Department of Revenue guidance or call the local recorder’s office ahead of time so you know which documents will trigger the tax and how payment is accepted at that office [1].
Common misconceptions
Misconception: 'Alabama has no transfer tax' — in fact, the state imposes a recordation tax on deeds and mortgages. The Alabama Department of Revenue describes a recordation tax that applies to mortgages, deeds and similar instruments recorded with the county probate office [1]. If you hear that Alabama has no transfer tax, that’s shorthand confusion: Alabama does not have a separately named “real estate transfer tax” in every county, but it does levy a statewide recordation tax on recorded deeds and mortgages [1]. For more detail, see . Alaska real estate transfer tax: what you need to know.
Misconception: 'Rate is percentage of sale price' — the statutory rates are expressed as cents per dollar amount, not as a simple percentage. Because the law uses cents-per-dollar units, calculating the charge requires applying those per-unit rates to the deed’s consideration or the mortgage principal rather than just multiplying by a single percentage rate [4].
Always check the county probate office or the Alabama Department of Revenue for the recording instructions used at closing [1].
Frequently asked questions
Is the transfer tax the same as a county or municipal tax?
No — the rates commonly discussed are the statewide recordation tax rates, and local jurisdictions may add separate fees or charges; check with your county recording office for local additions. [1]
Who decides who pays the recordation tax?
The purchase contract usually specifies who pays the recordation tax, and if it doesn't the responsibility is determined by local practice or negotiation between buyer and seller. [5]
Where can I find the law that governs this tax?
The recordation tax is set out in Alabama law in Title 40, Chapter 22, and the Alabama Department of Revenue publishes guidance on the recordation tax on its website. [2] [1]
Can either party be required to pay under state rules?
State guidance and common practice allow either the buyer or the seller to be responsible for the tax, subject to what the contract or local custom provides. [5] [1]
What should I do before closing?
Confirm who pays in your purchase agreement and contact the county recording office for any additional local fees or filing practices so you know the total costs before closing. [1]
Bottom line
Alabama’s transfer tax is collected as a state recordation tax and is assessed at fixed statutory rates for deeds and mortgages. [1]
Who pays is negotiable between buyer and seller and should be spelled out in the purchase contract; either party can be responsible under Alabama practice. [5]
If you’re preparing or reviewing a closing, confirm the contract language about who pays the recordation tax and have the county recorder or the Alabama Department of Revenue confirm filing procedures and any county-level fees that may apply. [1] [5]
Example: when determining closing costs, treat the recordation tax the same way you treat recording fees—identify the responsible party in the contract, allocate the amount in the closing statement, and verify the exact payoff/amount with the recorder’s office before closing. [1] [5]
Bottom line: use the statutory recordation rules as the baseline for calculating transfer tax exposure, but rely on the contract and the recorder or Department of Revenue for final responsibility and exact filing steps. [1] [5]
Recommended next step: check your purchase contract for the payment clause, then call your county recorder or the Alabama Department of Revenue to confirm the precise procedure and any additional local charges before signing final documents. [1] [5]