Alabama Mortgage Tax Explained
The rounding rule is small but real, and it is always upward.
Alabama deed & mortgage tax
Deed tax follows your equity, not the price. Change the loan and watch it move.
Alabama levies a recordation tax on mortgages at $0.15 per $100 of indebtedness, or fraction thereof. That works out to $1.50 per $1,000, set by statute, so it does not vary between title companies or counties.
The rounding
The phrase "or fraction thereof" does real work. The amount financed is rounded up to the next full $100 before the rate is applied. A county example makes it concrete: a $24,550 loan rounds to $24,600, and the tax is $24,600 × 0.0015 = $36.90.
It is never rounded down.
On a typical purchase
- $150,000 loan — $225.00
- $200,000 loan — $300.00
- $240,000 loan — $360.00
- $350,000 loan — $525.00
Why it is usually the biggest line
Because Alabama deed tax is charged on equity rather than price, the deed tax on a financed purchase is often tiny — $60 on a typical Huntsville transaction. The mortgage tax, calculated on the whole loan, is many times larger. Buyers who have read that "Alabama deed tax is cheap" are sometimes surprised by the mortgage tax line.
Refinances
A refinance records a new mortgage, so mortgage tax applies again on the new loan amount. There is no deed tax, because no deed is recorded. On a modification rather than a new mortgage, tax is generally due only on any increase in the indebtedness — worth asking about before you assume the full amount.
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Note: general information for Pennsylvania and Alabama property owners, not legal or tax advice. Rates, taxes, eligibility and deadlines are set by statute and by each state’s filed rate schedules and can change. Confirm the specifics with us and with a qualified professional before relying on them for a transaction.
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