Pennsylvania Transfer Tax

[Jason Prignoli]

Hey everyone!

For those Pennsylvania based investors and legal experts out there I was wondering if you can provide some guidance on the situation below:

If I purchased a multi-family property in my name, then transfer the property into an LLC that is solely owned by me after the sale, would I need to pay another transfer tax to the tune of the same transfer tax I incurred at closing on the property? Would this transfer be exempt from the tax in PA? I believe some states have different laws when it comes to this.

Thanks for the help!

Jason & @Jake Lord

[Steve Babiak]

You will have to pay another transfer tax.

Since this is not an arm’s length sale of the property, the transfer tax would be based on the value as determined by a formula that the PA Department of Revenue uses. That formula takes the property’s assessed value from the tax assessor, multiplies that by a factor that can be found at the PA Department of Revenue website, and then multiplies that value by the transfer tax percentage that is in effect for the property’s location, giving you the transfer tax that is due.

That method could result in you having to pay an even higher transfer tax if you bought a property well below market value.