Staring at a closing statement and wondering what the “deed excise” or “CPA” line means in Cambridge? You are not alone. Closing costs can feel opaque, especially when state and local charges use similar terms. This guide breaks down the Massachusetts deeds excise, Cambridge’s Community Preservation Act surcharge, who pays each, and how they show up at closing, with simple math and local next steps. Let’s dive in.
Massachusetts deeds excise basics
The deeds excise is a statewide transfer tax that applies when real property changes hands. It is administered by the Massachusetts Department of Revenue. In Middlesex County, the rate is $2.28 per $500 of sale price, or $4.56 per $1,000. You can review the rules in the Massachusetts Department of Revenue’s guidance on deeds excise and enforcement. See the DOR directive.
How the excise is calculated
- Rate: $2.28 per $500 of consideration, or fraction thereof. That equals 0.456% of the taxable amount.
- Formula: sale price divided by $500, rounded up to the next whole number, then multiplied by $2.28.
- Example A: $500,000 sale → 1,000 units × $2.28 = $2,280.
- Example B: $1,000,000 sale → 2,000 units × $2.28 = $4,560.
For the legal computation, rounding, and definition of consideration, review DOR Directive 88-18.
What counts as consideration
- The excise is based on what is paid for the property.
- You generally cannot deduct a new mortgage created at closing.
- In limited cases, an existing mortgage that the buyer takes subject to or assumes may reduce the taxable amount.
Because the details matter, see the rules on liens and encumbrances in DOR Directive 88-18, and confirm specifics with your closing attorney.
Who pays and how it is collected
By law, the person who makes or signs the deed pays the tax. In most home sales, that is the seller. Parties sometimes negotiate credits, but the excise remains the grantor’s legal obligation and is shown as a seller debit on the settlement statement. The Registry of Deeds collects payment at recording. For enforcement details, see DOR Directive 95-4.
Where you pay in Cambridge
For Cambridge properties, recording occurs at the Middlesex South Registry of Deeds, 208 Cambridge St., Cambridge. Many closings are e-recorded by your attorney, but the Registry can answer questions on payments, hours, and fees. Visit the Middlesex South Registry of Deeds.
Common exemptions and special cases
There is no excise on a bona fide gift because there is no consideration. Certain transfers by or to federal agencies and some corporate reorganizations may be exempt. Special rules also apply to co-ops, exchanges, partitions, and trust-related transfers. For examples, see the DOR’s guidance on bona fide gifts and this letter ruling on limited-equity cooperatives. Always confirm your situation with title counsel.
Cambridge’s CPA surcharge explained
Cambridge participates in the Community Preservation Act (CPA). This is not a transfer tax collected at closing. It is a 3% annual surcharge on the property tax bill that funds affordable housing, historic preservation, and open space. Cambridge adopted the CPA in 2001. Learn more on Cambridge’s CPA page and the state’s CPA background and match overview.
How CPA shows up at closing
- CPA is an annual surcharge on your property tax bill, not a one-time closing fee.
- At closing, you will see normal property tax prorations that include the CPA portion through the settlement date.
- After you own the home, you will see the CPA surcharge on your future tax bills.
How costs usually split in Cambridge closings
While terms are negotiable, here is what you typically see in Massachusetts:
- Deeds excise: seller pays as the deed’s grantor.
- Real estate commission: seller pays by market custom.
- Recording fees: seller covers discharge of their mortgage; buyer covers recording their new mortgage.
- Buyer expenses: lender fees, appraisal, buyer’s title insurance; owner’s title insurance is optional but common.
- Property taxes and CPA: prorated between buyer and seller as of the closing date.
For a practical overview of typical allocations, see this summary of Massachusetts closing costs for buyers and sellers. Confirm your specific credits and charges in your Purchase and Sale and Closing Disclosure.
Quick examples and a seller checklist
- $500,000 sale price → deed excise of $2,280.
- $1,000,000 sale price → deed excise of $4,560.
Seller checklist:
- Confirm who will pay the deeds excise in your contract and closing statement. See DOR enforcement guidance.
- Ask your attorney about recording at the Middlesex South Registry of Deeds and how the excise will be remitted.
- Review a draft settlement statement early to verify tax prorations, including the CPA portion, excise, and recording fees.
- If your deal involves assumptions, co-ops, trusts, or exchanges, have counsel confirm the excise calculation using DOR computation guidance.
Watch the policy conversation
You may hear about a local real estate transfer fee or “mansion tax.” Cambridge’s City Council has supported exploring a local-option transfer fee to fund housing, but any such fee would require state authorization and local adoption before taking effect. It is not currently charged at Cambridge closings. For context, see local reporting on the City Council’s discussion of transfer fees.
Ready for next steps?
If you are buying or selling in Cambridge, a clear plan around deed excise, CPA, and closing allocations protects your net. If you want a precise estimate and strategy tailored to your property, connect with Jennifer Fish for boutique, construction-informed guidance and a smooth, high-touch closing experience.
FAQs
What is the Massachusetts deeds excise and how much is it?
- It is a statewide transfer tax on real estate sales, calculated at $2.28 per $500 of sale price (about 0.456%), collected when the deed is recorded.
Who pays the deed excise in a Cambridge home sale?
- By law, the deed’s grantor pays, which is typically the seller; parties can negotiate credits, but the grantor remains legally responsible.
Does Cambridge charge a transfer tax at closing?
- No; Cambridge’s CPA is a 3% annual surcharge on property tax bills, not a one-time transfer tax at closing.
How do I pay the excise for a Cambridge property?
- Your attorney usually handles it at recording with the Middlesex South Registry of Deeds, 208 Cambridge St., Cambridge.
Are there deed excise exemptions in Massachusetts?
- Yes; bona fide gifts, certain government transfers, and specific reorganizations can be exempt, with other special-case rules.
Can I deduct my new mortgage when calculating the excise?
- No; a new mortgage at closing is part of the taxable consideration, while an existing assumed mortgage may be deductible in limited cases.
