Costs of Selling Land in Alabama

Selling Costs in Alabama: What to Know

Selling land in Alabama costs less than in many states. The state deed tax is 50 cents for each $500 of value, which is $1 per $1,000. Other costs are the closing fee, a title search or policy, a share of the year's property taxes, and income tax on any gain.

This page lists each cost, who usually pays it, and where the rate comes from. A worked example shows what a seller keeps from a $25,000 sale. If you want to skip most of these costs, you can get a cash offer for your Alabama land.

Alabama deed tax

Alabama charges a recordation tax on deeds of $0.50 per $500 of value or fraction of $500, under Code of Alabama Section 40-22-1. The Alabama Department of Revenue lists the rate. The probate office collects it when the deed is recorded.

The rate is set by the state, so it is the same in every county. Values are rounded up to the next $500. For example, Mobile County Probate Court shows that a $501 value is taxed as $1,000. There is no separate city transfer tax in the state sources we checked.

• $10,000 sale: $10 deed tax
• $25,000 sale: $25 deed tax
• $60,000 sale: $60 deed tax

Who pays what by custom

The deed tax statute does not say whether the buyer or the seller pays. Your purchase contract decides it. Read the closing cost section of the contract before you sign.

Recording fees are set by each county probate judge. The general state fee is $3 per page under Section 12-19-90, but local laws change it in many counties. Mobile County, for example, charges $2.50 per page. The seller usually pays to clear their own liens and back taxes, since the buyer needs clear title.

Attorney or title company closing

Alabama land sales can close through a title company or a real estate attorney. Either one can search the title, prepare the deed, collect the deed tax and record the deed with the probate office.

Closing fees and title insurance premiums are not set by Alabama law. They vary by company, so ask for a written quote. On a small lot, these fees can be a large share of the price.

Prorated property taxes

Property taxes are split at closing so each side pays for the part of the year they owned the land. Your closing statement shows the credit or charge. If past years are unpaid, those back taxes are paid from the sale proceeds before you receive your money.

Capital gains tax basics (federal and Alabama)

You owe tax on the gain, not on the full price. The gain is the sale price minus your basis (what you paid plus improvements) and minus your selling costs. The IRS explains basis in Topic 703.

If you owned the land for more than one year, the federal gain is long-term and is taxed at 0%, 15% or 20%, based on your taxable income. For 2025, a single filer pays 0% on long-term gains when taxable income is $48,350 or less. Land held one year or less is taxed as regular income. See IRS Topic 409.

Alabama has no separate capital gains rate. The gain is part of your Alabama taxable income, which is taxed at 2%, 4% and 5%. For a single filer, income over $3,000 is taxed at 5%, according to the Alabama Department of Revenue.

The closing agent usually reports the sale to the IRS on Form 1099-S. This page is general information, not legal or tax advice. Confirm the numbers with your closing agent or a tax professional.

How selling to a cash buyer changes the costs

A listing with an agent adds a commission on top of the costs above. When you sell to EasyLotBuyer, there are no fees or commissions, and we pay the closing costs. You get a cash offer within 24 hours and can close in as few as 7 days.

We also buy land with back taxes, liens, title issues or no road access, and land held by heirs or an estate. Back taxes are paid at closing from the sale, so you do not need cash up front. Your capital gains tax is still your own, so keep your closing statement for your tax return.

• No agent commission
• No closing costs for you: we pay them
• Back taxes paid at closing from the sale
• Cash offer within 24 hours