AL · #24 by population

Buying a home in Alabama

Costs and rules that are specific to Alabama. Main city: Birmingham.

In short

Alabama taxes property sales through its deed tax, Code of Alabama 40-22-1, requires an attorney for part of the closing and has no general seller disclosure form (buyer beware). It allows both court and out-of-court foreclosure and is not a community property state. Deadline to appeal a property tax assessment: 30 calendar days from the final publication of the assessment notice; then 30 days from the board's notice to appeal to circuit court.

Calculate for Alabama

If you buy

Alabama state transfer tax

Deed tax (privilege or license tax), Code of Alabama 40-22-1: $0.50 per $500 of price, or fraction of $500 (about 0.1%). Change the price: the amount is recalculated instantly.

Price$233,300
State transfer tax$233.50
Share of the price0.1% of the price
Who paysSet by the purchase contract

Default price: the Alabama median value of owner-occupied homes, $233,300 (Census ACS 2024). Rule: Divide the price by $500, round up to the next whole unit, multiply by $0.50. Instruments of $500 or less pay $0.50. Two-thirds goes to the State and one-third to the county. Who pays: Neither statute says who pays; the sales contract and closing statement assign it. Not included: county and city transfer taxes, the tax on the mortgage, recording fees, title insurance and lender charges. Alabama transfer tax guide · all 50 states.

If you sell

Capital gain and the federal tax on it

Same federal rule in every state: Section 121 of the Internal Revenue Code excludes up to $250,000 of gain on a main home ($500,000 for a married couple filing jointly).

Capital gain$350,000
Section 121 exclusion$250,000 (limit $250,000)
Taxable gain$100,000
Type of gainLong-term (owned over 1 year), 15% chosen
Federal tax on the gain$15,000

Section 121 excludes $250,000; the rest is taxable.

Gain = sale price minus your adjusted basis (purchase price, buying costs and improvements); selling expenses reduce it (IRS Publication 523). Long-term rates for sales in 2026, by taxable income including the gain (IRS Rev. Proc. 2025-32, section 4.03): 0% up to $49,450 single or $98,900 married filing jointly, 15% up to $545,500 single or $613,700 jointly, 20% above. Not included: Alabama state income tax on the gain (not computed), the net investment income tax, depreciation recapture on a rental or home office, and the reduced exclusion for an early sale. Agent commissions are negotiated and never set by law. Capital gains on a home sale.

Alabama in short

Is there a real estate transfer tax in Alabama?

Alabama has no single transfer tax but charges a deed tax of $0.50 per $500 of price (or fraction) and a mortgage tax of $0.15 per $100 borrowed, both paid at recording. The statutes do not say whether buyer or seller pays.

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How much is the state transfer tax on a $233,300 home in Alabama?

On $233,300, the median value of owner-occupied homes in Alabama (Census ACS 2024), the state deed tax, code of alabama 40-22-1 comes to $233.50 ($0.50 per $500 of price, or fraction of $500 (about 0.1%)). County and city taxes are not included.

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What closing costs does Alabama law set?

Alabama has no official typical closing-cost total. The state fixes a deed tax of $0.50 per $500 of price and a mortgage tax of $0.15 per $100 borrowed, which come to $250 and $300 on a $250,000 sale with a $200,000 loan.

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How is property tax calculated in Alabama?

Alabama assesses an owner-occupied home at 10% of market value and applies local millage. In Birmingham the October 2025 total is 72.5 mills, about $1,760 a year on a $250,000 home.

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What is the deadline to appeal a property tax assessment in Alabama?

In Alabama, file a written objection with the county board of equalization within 30 calendar days of the final publication of the assessment notice, and if the board keeps the value, appeal to circuit court within 30 days of the board's notice.

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Do you need a real estate attorney to close in Alabama?

No Alabama statute says a buyer or seller must hire an attorney to close, but under Ala. Code 34-3-6 only a lawyer may prepare deeds and mortgages for others for pay, so an attorney normally prepares or supervises the legal documents even when a title company runs the table.

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What must a home seller disclose in Alabama?

Alabama does not require a home seller to deliver a disclosure form in the statutes reviewed. The written duty falls on licensed agents, who must disclose known latent structural defects (Code of Alabama 34-27-36), with fines of $100 to $5,000. Fraud statutes apply to all sellers.

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How does foreclosure work in Alabama?

Alabama lets a lender foreclose without going to court when the mortgage contains a power of sale: notice is published once a week for three successive weeks, then the home is sold at the county courthouse door.

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What first-time home buyer programs does Alabama offer?

Alabama offers first-time buyer help through the Alabama Housing Finance Authority (AHFA): First Step and Step Up give below-market rates and down payment help of 4% of the sales price, up to $10,000. The City of Birmingham's Ready to Own program adds up to $10,000 for homes inside city limits.

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Which natural hazards affect home insurance in Alabama?

Standard Alabama home policies do not cover flood. An NFIP policy covers up to $250,000 for a home and $100,000 for belongings, and the Strengthen Alabama Homes program offers grants of up to $10,000.

Full Alabama guide

How much tax when you sell a home in Alabama?

The federal rule is the same in Alabama as in every state: if you owned and lived in the home as your main home for at least 2 of the last 5 years, the first $250,000 of gain is excluded, $500,000 for a married couple filing jointly (Section 121, IRS Publication 523). Bought $400,000, sold $750,000: a single owner has $100,000 of taxable gain, $15,000 of federal tax at the 15% long-term rate; a couple filing jointly owes nothing. Alabama income tax on the gain is not computed here.

Capital gains on a home sale

Alabama guides

Birmingham

Buying a home in Birmingham, Alabama

Professionals in Alabama

All states · Federal guides