Closing costs and taxes when buying or selling in the USA

Buying or selling a home in the USA involves costs beyond the price: closing costs, taxes, title and escrow. This guide is informational and amounts vary widely by state, county and situation; always confirm with your closing agent and a tax professional.

When you buy

• Closing costs: the fees to close the purchase, commonly around 2% to 5% of the price for the buyer. They include lender fees, appraisal, title search and more.
• Title insurance: protects against defects in the title (liens, ownership disputes). A lender policy is usually required; an owner policy is optional but recommended.
• Escrow: a neutral third party holds the funds and documents and releases them when every condition is met. Some states use an attorney instead.
• Transfer tax: a tax to transfer the property, set by state, county or city. Who pays it (buyer or seller) varies by location.

While you own

• Property tax: an annual local tax based on the assessed value; the rate varies a lot by county and state. Lenders often collect it monthly through an escrow account.
• HOA dues (in condos and planned communities): not a tax, but a recurring cost to budget for.

When you sell

• Agent commission: if you use agents, it is usually the largest selling cost.
• Capital gains tax: on the profit from the sale. For a primary residence, federal law allows an exclusion of up to $250,000 of gain (single) or $500,000 (married filing jointly) if you owned and lived in the home at least two of the last five years. Gain above that, or on a non-primary home, may be taxable.

Practical tip

Add it all up before closing: price plus closing costs, plus ongoing property tax and any HOA. Ask for the loan estimate and the title work, and verify the property records. See how to protect yourself in the guide to avoid scams.

Informational content, not legal or tax advice. Rates, exclusions and who pays each cost change by location and over time: confirm with official sources and a professional.