Mortgage stamp duty is a state-level tax charged when your mortgage document is recorded with the county, calculated as a percentage of the loan amount rather than the property’s price. About a dozen U.S. states impose some version of it, with rates that run from roughly 0.02% on the low end to over 1% on the high end. On a typical home loan that means anywhere from a few dollars to several thousand added to your closing costs. The borrower almost always pays it, and it comes due at closing.
How Much It Costs and How It’s Calculated
The tax base is the principal amount of the mortgage, not the purchase price of the home. Borrow $350,000 to buy a $450,000 house and the tax applies to $350,000. Most states that impose the tax use a flat percentage, though a handful use a sliding scale where the rate steps down at higher loan tiers, particularly above $10 million. Certain cities layer an additional local rate on top of the state rate.
On a $400,000 mortgage, the range looks like this:
- At 0.15%, the tax is $600.
- At 0.25%, it’s $1,000.
- At 0.35%, it’s $1,400.
- At 1.00%, it’s $4,000.
The obligation can technically be negotiated between buyer and seller like any other closing cost, but in nearly every jurisdiction the default is that the borrower pays. Your lender will not fund the loan until the tax is paid and the mortgage is recorded, so it isn’t a bill you can defer.
Which States Charge It
Most states don’t. Roughly a dozen charge a mortgage recording tax, mortgage registry tax, or documentary stamp tax on the loan instrument itself. The rest charge only a flat recording fee to file the mortgage with the county recorder, usually between $10 and $100.
The difference is significant for your closing budget. On a $400,000 loan, a $50 flat recording fee and a 1% mortgage recording tax are $50 and $4,000, respectively. Your lender is required to estimate these charges on your loan estimate within three business days of receiving your application, so the number won’t appear out of nowhere at closing. Checking your state’s rules early still helps you plan.
Mortgage Stamp Duty vs. Deed Transfer Tax
Two separate taxes can show up when you buy property, and they’re easy to confuse because both hit at closing. A deed transfer tax applies to the sale of the property and is calculated on the purchase price. Mortgage stamp duty applies to the financing and is calculated on the loan amount. One targets the change in ownership; the other targets the lender’s lien.
Even if your state has no transfer tax, you might still owe mortgage stamp duty. If your jurisdiction charges both, they stack. A buyer putting 20% down pays transfer tax on the full purchase price but mortgage stamp duty only on the 80% they borrowed. Both appear on your closing disclosure under government recording and transfer charges as separate line items.
Exemptions Worth Checking
Refinances
The most widely available exemption applies to refinances. In most states that charge this tax, refinancing your existing mortgage does not trigger the full tax again if you are refinancing the same debt on the same property. The tax applies only to any additional money borrowed above the outstanding balance. Refinance a $300,000 balance into a new $340,000 loan and you owe stamp duty on the $40,000 increase. Some jurisdictions require the refinance to be with the same lender; others extend the exemption regardless of who holds the new loan.
Government Entities and Nonprofits
Government agencies and certain nonprofits frequently qualify for exemptions. Federal credit unions enjoy broad statutory tax exemptions under federal law, though court decisions have limited this protection in some states. Nonprofits financing affordable housing and government-backed lending programs often qualify as well. These entities typically file an affidavit at recording that describes the mortgage and explains the basis for the exemption.
Some states have created targeted exemptions for specific categories of borrower, such as seniors taking out reverse mortgages. Whether a first-time homebuyer exemption exists depends entirely on your state; a few jurisdictions have enacted or proposed reduced rates for first-time buyers, but this is not universal. Check with your county recorder’s office or a local real estate attorney before assuming any exemption applies.
How You Actually Pay It
You pay mortgage stamp duty when your mortgage is recorded with the county, and in practice your title company or closing attorney handles the mechanics. They collect the tax as part of your closing costs, then submit the mortgage document and payment to the county recorder. Payment is usually by certified check or electronic funds transfer.
Some jurisdictions have moved to electronic filing that allows title companies to submit documents and tax payments digitally, with near-instant confirmation and digital stamping. Others still require physical submission. Either way, the mortgage is not legally recorded until the tax is paid in full. Once recorded, the county issues a stamped or receipted copy that serves as public notice of the lender’s lien.
Federal Tax Treatment
Mortgage stamp duty is not deductible as a real estate tax on your federal return. The IRS treats transfer and stamp taxes paid by the buyer as additions to the property’s cost basis rather than current-year deductions.1Internal Revenue Service. Publication 530 (2025), Tax Information for Homeowners You won’t see a tax benefit in the year you pay, but the higher basis reduces your taxable gain when you eventually sell.
This catches homeowners who expect to write off every cost tied to their mortgage. Mortgage interest and state and local property taxes remain deductible subject to the SALT cap, but the one-time stamp duty payment goes to basis. Keep your closing disclosure, because you’ll need it years later when calculating gain on a sale. One small consolation: because stamp duty goes to basis rather than into the SALT bucket, it doesn’t eat into that cap.2Internal Revenue Service. How to Update Withholding to Account for Tax Law Changes for 2025