Majestic Tech by an Enlightened Wealth Institute student

Taxes should not be taken for granted in any real estate transaction. Sales tax is usually the obligation of a merchant to collect from the buyer and remit it to the state. In real estate sales, buyers pay for property transfer fees and other obligations while sellers pay some amount for a capital gain tax. Very few real estate agents would consent to share the burden of paying due real estate taxes with their customers. Before closing a sale, the two parties should agree well who should pay what, and both parties should be informed of the existence of such obligations. It is unethical for a seller to pass on all taxes due to the buyer because as a seller, the state imposes taxes proper due taxes to sellers.

The most common form of tax reduction strategy is an internal agreement between the buyer and seller. The lesser price declared in the official transaction documents related to the real estate sale, the lower the tax the state can collect. Since sales transaction documents, such as a deed of sale, are the only proof available to prove the conclusion of a sale, tax agencies have a hard time going after this practice. But the seller must sign the contract at a time when the buyer already handed over the amount agreed internally. Otherwise, the buyer could be compelled to pay only what was stipulated in the contract.

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