PA : Quit claim deed to single-member LLC incur transfer tax?

Question

Hi BP Community ,

I have purchased a property in PA as individual ownership. I am looking to transfer it to an LLC through quit claim deed. My bank is OK as long as the owner of the LLC and and property match 100%.

does transferring it to an single member LLC owned by me subject to transfer tax in PA? Also, will the title insurance still be valid or will it be void with the transfer?

The transfer tax is 2.5% in the county such a high transfer tax would discourage me for any transfer not just because it would be an expensive affair, but I am not sure if it is worth the benefits.

Thanks in Advance .!!

Peter Halliday · Answer

Is this ownership of a property or note? Either way an attorney that state would provide better legal answer than those on BP

Patrick Liska · Answer

@Peter Walther

There are some that are, most are within an organization based on amount of shares held, donations, inheritance, leases but not from an individual to an llc., here are the Excluded transactions: https://casetext.com/regulatio...

Peter Walther · Answer

A quick look at the Section shows there are a couple of dozen transactions that are exempt from the transfer tax. Some appear quite complex. I'm neither a PA attorney nor expert in PA realty tax exemptions which is why I suggested Jap contact the DOR directly to get an answer from the horses mouth, so to speak.

Peter Walther · Answer

According to the PA DOR web site:

Some real estate transfers are exempt from realty transfer tax, including certain transfers among family members, to governmental units, between religious organizations, to shareholders or partners and to or from nonprofit industrial development agencies. Deeds to burial sites, certain transfers of ownership in real estate companies and farms and property passed by testate or intestate succession are also exempt from the tax.

Peter Walther · Answer

A title company probably won't provide legal advice. As to the continuation of coverage, I suspect they'll direct a questioner to the policy for the definition of insured. I also believe a title company won't prepare a deed if it doesn't involve the issuance of a title policy.

Wendy Patton · Answer

This can trigger a transfer tax in some states - but one more thing to make sure you don't forget: change your home owners insurance to cover the new LLC once it's moved otherwise you will have an issue if you ever have a claim - In Michigan we also have to file a property transfer affidavit when we file any deed

Patrick Liska · Answer

YES, any transfer of title of a property incurs a transfer tax in PA., it does not matter that you are the manager or CEO of the llc. Even if you have an llc with a property that is an asset of the llc but then you sell the llc, that property in title with the llc would be subject to transfer tax. PA has closed some of the loopholes around it, you will be paying a transfer tax.

Chris Seveney · Answer

@Jap Path

It seems like almost ever title company on the planet is out of pennsylvania - I would recommend calling a title company and asking them as they would know. There may also need to be special language on the deed for the exemption. Pay them $150-$250 to draft it for you if you can do it

Title insurance they could tell you that answer as well

Peter Walther · Answer

It may be exempt from the transfer tax. I suggest you call the PA DOR

Realty Transfer Tax (pa.gov)

Check the definition section of your title insurance policy for Insured. If your LLC meets the definition . . .

PA : Quit claim deed to single-member LLC incur transfer tax?

PA : Quit claim deed to single-member LLC incur transfer tax?

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