Transfer tax is a fee imposed by the government when property, such as real estate, is sold or transferred from one owner to another. This tax is typically calculated as a percentage of the sale price and varies by location. The funds collected from transfer taxes are often used to support local services and infrastructure. When a property transaction occurs, both the buyer and seller may be responsible for paying the transfer tax, depending on local laws. It's important for both parties to understand their obligations regarding this tax to avoid unexpected costs during the transaction process.