A tax that is due to the county and the state for recording a deed and is paid by the seller is?

• A. Property tax
• B. Income tax
• C. Capital gains tax
• D. Transfer tax (revenue stamps)

Answer: (D)

The concept being tested is transfer taxes tied to recording a deed. When a property changes hands, the county (and sometimes the state) collects a tax to document the transfer of ownership. This windfall is typically paid by the seller at closing and is shown as documentary stamps or revenue stamps on the deed. It’s a tax on the act of conveying title, not on ownership itself or on income or gains.

Property tax is an ongoing charge based on property value assessed by the county and paid by the owner each year. Income tax is a tax on earnings from work or investments. Capital gains tax is a tax on the profit from selling an asset. None of those are linked to the recording of a deed, which is why transfer tax (revenue stamps) is the correct description for this scenario.