Buying or selling in Homewood and trying to pin down your closing costs? One of the most common questions we hear is how Alabama’s deed tax and mortgage recordation tax work, and what Jefferson County’s recording fees add on top. You want a simple, local explanation you can trust so you can budget with confidence. In this guide, you’ll learn what each charge covers, who usually pays, how the math works, and a quick example you can follow. Let’s dive in.
Deed and mortgage taxes, in plain English
Deed tax
The deed tax is a state transfer tax that applies when real property changes hands. It is calculated from the purchase price or consideration listed on the deed. The closing agent typically collects it and remits it through the county when recording the deed. Custom and contract decide who pays, but many Alabama contracts spell out the allocation.
Mortgage recordation tax
The mortgage recordation tax applies when a new mortgage is recorded. It is based on the principal amount of the loan. Borrowers usually pay this tax at closing, though your purchase agreement can allocate costs differently. Lender requirements often expect the borrower to cover mortgage-related recording charges.
Jefferson County recording fees
Recording fees are county-level charges for recording documents such as deeds, mortgages, and releases. These fees are separate from state taxes and can include a base fee per instrument, per-page charges, and indexing. They are paid at or just after closing as part of the recording process in Jefferson County.
For official guidance and current rates, review the Alabama Department of Revenue and Jefferson County resources. You can start with the Alabama Department of Revenue for state-level rules and visit the Jefferson County recording office for county fee information.
Who usually pays in Homewood
Your contract controls. In Alabama, the purchase agreement should clearly assign the deed tax and other closing costs. Local practice may lean toward sellers covering some transfer-related items, while borrowers commonly pay the mortgage recordation tax and mortgage-related recording fees. Always confirm your allocation in writing and review lender requirements before you finalize terms.
How Alabama calculates these charges
The formulas are straightforward. Use the latest published rates and fee tables when you run your numbers.
Deed tax formula
- Base: Purchase price or consideration on the deed
- Formula: Deed tax = Purchase price × State deed tax rate
Mortgage tax formula
- Base: Principal amount of the mortgage
- Formula: Mortgage tax = Mortgage amount × State mortgage tax rate
Jefferson County recording fees
- Components can include:
- Base fee per instrument
- Per-page charges based on page count
- Indexing or additional administrative fees
- These apply to each document you record, so a deed, mortgage, and any releases each add their own fee line.
Because rates and fees change, confirm current numbers with the Alabama Department of Revenue and the Jefferson County recording office before you prepare a closing estimate.
What this means for your Homewood closing
- The closing agent collects deed tax, mortgage tax, and county fees and submits them with your documents for recording.
- Your lender expects proof of recordation and may require you, as the borrower, to fund mortgage-related items at closing.
- Any exemptions or special situations need to be identified early so your closing disclosure reflects the correct amounts.
Quick example you can follow
The math below is for illustration only so you can see how the pieces fit together.
Illustrative estimate only. Rates and county fees change; this example uses illustrative numbers for demonstration. Verify current state deed and mortgage tax rates and Jefferson County recording fees before quoting clients. See Alabama Department of Revenue and Jefferson County fee tables.
- Example inputs (illustrative):
- Purchase price P = $350,000
- Mortgage amount M = $280,000
- Assumed (illustrative) state deed tax rate Rd = 0.10% (0.001)
- Assumed (illustrative) state mortgage tax rate Rm = 0.20% (0.002)
- Assumed (illustrative) Jefferson County recording fees Fcounty = $150 total
- Calculations (illustrative):
- Deed tax = $350,000 × 0.001 = $350
- Mortgage tax = $280,000 × 0.002 = $560
- County recording total = $150
- Estimated combined cost (illustrative) = $350 + $560 + $150 = $1,060
Again, this is an example of the math only. Always apply the current state rates and the latest Jefferson County fee schedule.
Tips to keep costs predictable
- Put cost allocation in your contract. Spell out who pays deed tax, mortgage tax, and recording fees.
- Ask your lender early about borrower-paid requirements for mortgage taxes and recording charges.
- Check for exemptions. Certain transfers may qualify under state rules. Review the latest guidance on the Alabama Department of Revenue site.
- Estimate document page counts. Per-page recording fees add up when you have long mortgages or multiple releases.
- Coordinate with your title company. They can pull tax certificates, confirm the page count, and update your estimate right before closing.
How we help you plan your bottom line
When you work with Team Sparkman, you get clear, step-by-step guidance on closing costs from day one. We coordinate with trusted title and lending partners, confirm current state rates and Jefferson County fees, and reflect every line item on your estimate so there are no surprises. If you are selling, we help you decide how to structure cost allocation to support your pricing and negotiation strategy. If you are buying, we coach you on lender expectations and timing so your funding is set well before closing.
Ready to plan your Homewood move with confidence? Request your free home valuation and a personalized cost review. Connect with Unknown Company to get started today.
FAQs
What are deed and mortgage taxes in Alabama?
- They are state-level taxes tied to real estate transfers and new mortgages, collected at recording and calculated using published state rates.
Who pays deed tax and mortgage tax in a Homewood sale?
- Your purchase agreement decides. Local practice often has the borrower pay mortgage-related items, but confirm allocation in the contract.
Where can I find current Alabama rates and Jefferson County fees?
- Check the Alabama Department of Revenue for state rates and the Jefferson County recording office for local fee information.
Do cash buyers in Homewood pay a mortgage recordation tax?
- No, cash purchases do not include a mortgage, so there is no mortgage recordation tax. Deed tax and county recording fees can still apply.
Are there exemptions from deed or mortgage taxes in Alabama?
- Some transfers may be exempt under state law. Review the Alabama Department of Revenue’s guidance and confirm with your closing agent.
When are deed tax, mortgage tax, and county fees due in Jefferson County?
- They are typically collected at closing and remitted at the time of recording by your closing agent or title company.
