Alabama Deed Tax and Mortgage Tax: What You Pay When You Buy a Home

When a home is bought in Alabama, the deed — and any mortgage — is recorded with the probate office of the county where the property is. Alabama charges a recordation tax when these documents are recorded, under sections 40-22-1 to 40-22-12 of the Code of Alabama.

The rates

• Deed tax: $.50 for every $500 of value, or part of $500.
• Mortgage tax: $.15 for every $100 of the debt, or part of $100.
• Two-thirds of the tax goes to the state's General Fund and one-third to the county.

When the mortgage is recorded with the deed

If the mortgage is recorded at the same time as the deed, the deed tax is worked out only on the part of the sales price above the mortgage — as long as the mortgage is made to a taxable concern and the mortgage tax is collected. Baldwin County's probate office gives this example: on a $125,000 sale with a $50,000 mortgage, deed tax is charged on $75,000.

Worked examples

• Cash purchase for $300,000: deed tax $300 (600 × $.50). No mortgage tax.
• $300,000 purchase with a $240,000 mortgage recorded at the same time: deed tax on $60,000 = $60, plus mortgage tax on $240,000 = $360. Total $420.
• $125,000 purchase with a $50,000 mortgage recorded at the same time: deed tax on $75,000 = $75, plus mortgage tax on $50,000 = $75. Total $150.

What else you pay

Each county probate office also charges recording fees, usually per page and per document, and these differ from county to county. Your closing attorney or the probate office will give you the exact figure. The Alabama Department of Revenue publishes a directory of county probate offices.