The Real Estate Transfer Tax is a tax on the transfer, sale or granting of real property or an interest in real property. The tax is also due on transfers of interests in “real estate holding companies”. The current tax rate is $1.50 per $100 of the price or consideration for the transfer, half payable by the buyer and half by the seller with a minimum tax amount of $40. Some specific exemptions are allowed, as specified herein.
REAL ESTATE TRANSFER TAX RATES:
- 7/1/99 – Present $1.50 per $100.
- 7/1/93 – 6/30/99 $1.00 per $100.
- 4/1/90 – 6/30/93 $1.05 per $100.
- Prior to 4/1/90 Contact the Department
Are transfers involving revocable trusts taxed differently? Transfers involving revocable trusts are taxable, but the Department will not challenge the price or consideration on which the tax is calculated, even if it was below FMV, if the beneficial interests in the trust are represented by non-transferable shares and the trust was set up and funded for estate-planning purposes as a testamentary substitute. The only transfers into such a revocable trust that qualify for the tax treatment described above are those that are conveyed by the creator of the trust into the trust and are designated under the trust’s terms to be conveyed to the trust beneficiaries as a result of the creator’s death. The only transfers out of such a revocable trust that qualify for the tax treatment described above are those that are conveyed directly to the beneficiaries of the trust as a result of the creator’s death. Any other transfers into or out of the trust are taxable on the FMV of the property transferred. Transfers out of a revocable trust that qualify for one of the exemptions specified in RSA 78-B:2 are, of course, exempt.
Is a transfer into or out of an irrevocable trust taxable? It depends. If the transfer is a gift, it is not taxable. If it is not a gift, the same rules apply as for all other contractual transfers.
What are the most common exceptions to the Real Estate Transfer Tax? The most common exceptions are:
• Gifts (See “What is a non-contractual transfer?”)
• Transfer of title between spouses pursuant to a final decree of divorce or nullity.
• Transfers to the state, a state agency, a county, a city/town, a school district or a village district. (Transfers from the above are not exempt.)
• Deeds or other instruments that correct a deed or other instrument previously given.
• Deeds given by a collector of taxes for property purchased at a tax sale.
• Transfers of cemetery plots.
• Transfers that occur by devise or by the laws regulating interstate succession and descent or by the death of any cotenant in real estate held by joint tenancy.
• Transfers to the beneficiaries of a partnership interest where the partnership dissolves by operation of law due to the death of a partner.
• The initial sale by a dealer of “manufactured housing.”
What is a non-contractual transfer? A non-contractual transfer is a completed transfer of real estate or of an interest in real estate made as a gift, where no consideration is paid. The transferor must have relinquished control of the real estate or interest in real estate.
Can transfers of real estate between a business entity and its owner be considered a gift? No. Such transfers are not gifts because the owner receives consideration in exchange. The consideration comes either in the form of additional shares (or other indications of ownership interests) in the business entity and the business will have additional assets as a result of the transfer, or in the form of the enhanced value of the owner’s shares (or other ownership interests) as a result of the transfer. Any transfer of real estate between a business and it’s owners is taxable based on the fair market value of the assets transferred.
What is the penalty for failing to file a return? If a return is not filed on a timely basis, a penalty equal to 5% of the outstanding tax balance with a minimum of $10 a month is charged for each of the first five months after the return is due.
Are there any other penalties? There is a penalty equal to 100% of the additional tax due if either the buyer or the seller makes a false statement on either the transfer tax form or the deed that no tax is due, or pays tax on less than the actual price or consideration for the transfer. The 100% false statement penalty is in lieu of the 10% late payment penalty.
How/Where do I request a refund? Refunds are processed by DRA. The tax paid to the county registrar of deeds must first have been forwarded to DRA. Each taxpayer must send a signed letter requesting a refund. All documentation supporting the refund must be submitted before a refund will be issued. The taxpayer will have to re-record the deed for the corrected amount of tax. To request a refund, write to Audit Division, PO Box 454, Concord, NH 03302-0457.
Who pays the Real Estate Transfer Tax? The tax is assessed on both the buyer and the seller, who buy tax stamps from the Registrar of Deeds in the county where the property is located. The registrar affixes the stamps to the deed.
When is the return due? A Declaration of Consideration, Form CD-57, and a Real Estate Transfer, Form PA-34, must be filed with the Department of Revenue Administration within 30 days from the recording of the deed. For questions about the CD-57, call Central Taxpayer Services at (603) 271-2191. For questions about the PA-34, call the Property Appraisal Division at (603) 271-2687.
Where do I obtain the forms for filing? You will need Form CD-57 and Form PA-34.
You may obtain Form CD-57 by visiting our forms section or by calling the Department of Revenue Administration forms line at (603) 271-2192.
Form PA-34 must be obtained by contacting the Property Appraisal Division at (603) 271-2687 as photocopies or facsimile copies of Form PA-34 are not acceptable. These forms are also available at each county Register of Deeds office.
What are the types of transfers for which a CD-57, must be filed? A CD-57 must be filed for most contractual transfers that are not specifically exempt from taxation under RSA 78-B:2. A CD-57 must also be filed for any non-contractual (gift) transfer. CD-57’s are not required for contractual transfers that involve only a utility easement.
Where can I obtain more information? You may access more information on our web site at revenue.nh.gov, call Customer Service at (603) 271-2191 or write the Audit Division, PO Box 457, Concord, NH 03302-0457.
Should I re-record a deed if there is a change to the amount of transfer tax paid? Yes, you should re-record your deed if there are changes.
What are some of the more common types of contractual transfers of real estate that are not exempted from transfer tax? The most common types of taxable contractual transfers are:
• Most sales of land, house or building.
• Transfers between a business entity and its owners, including those in dissolution of the business.
• Transfers between related business entities, even if the entity acquiring the real estate immediately resells the property to an unrelated party and pays the full amount of transfer tax on the second sale.
• Parties receiving property from the state of NH, a county, a town, or other political subdivision of the state are responsible for paying the buyer’s share of the tax on the transfer. Transfers made to such entities are exempt from tax.
• For transfers involving the US government or any of its agencies or instrumentalities, the US government, agencies and instrumentalities whether transferor or transferee are exempt. Other non-governmental parties may be responsible for paying their half of the tax.
• A sale or granting of a right-of-way or an easement on property.
• A transfer of real estate or any interest therein through foreclosure or by a deed in lieu of foreclosure, even in instances where the buyer and the seller are the same person or entity. (The consideration in such transfer is the reduction in the obligor’s debt plus the amount of the debt assured by the transferee).
• A sale, granting or transfer of real estate or an interest in real estate by a trustee in bankruptcy. (Note: Transfers authorized by a bankruptcy court as part of a reorganization of a company under Chapter 11 of the Federal Bankruptcy Code are not subject to transfer tax.)
• Leases of real estate when the term of the lease is 99 years or longer, or leases of shorter duration if renewal rights could extend the total period of time to 99 years or more.
• Property transferred through a deed issued as a result of a sheriff’s sale.
• A sale, granting, or transfer of standing timber occurring apart from the sale, granting or transfer of the land on which it stands.
• The transfer of an exclusive interest in or right to take soil, gravel, minerals and the like from another’s real estate.
• Transfers of real estate, such as buildings and building fixtures, where the owner of the building leases the land on which the building is located.
• Transfers of interests in vacation time-share property.
• Property transferred as part of a like-kind exchange under Sec.1031 of the IRC or as part of a land swap are subject to transfer tax based on the fair market value of the property. Transfer tax is payable on each property transferred.
What is the amount of tax due on the transfers listed in the question above? The amount of tax due on all of the transfers listed must be determined based on the actual price or consideration paid, with a $40 minimum.
Are transfers between merging corporations subject to transfer tax? Transfers occurring on or after July 1, 2001, are taxable. Prior to that date, transfers pursuant to a merger, consolidation or reorganization, if tax free under IRC Section 368, were exempt from transfer tax.
Are transfers in conjunction with the conversion from one form of ownership interest to another subject to transfer tax? Transfers on or after July 1, 2001, are taxable. For a period of years prior to that date, such transfers were exempt if each entity had transferable shares, and their assets and liabilities as well as their ownership interests were identical before and after the conversion.
If my company relocates me, is the relocation company deed subject to tax? Yes, both the purchase by the relocation company and the subsequent resale are subject to tax.
When is Fair Market Value (FMV) used to determine the taxable value of transferred real estate? FMV is used wherever there is a question whether the stated price or consideration for the transfer accurately represents the actual price or consideration. FMV is also used whenever there is an exchange of property or services that is not readily expressed in monetary terms. The most likely scenario for use of FMV is when the transfer is between related parties.
What is Fair Market Value? “Fair Market Value” means the price the property would command if sold by a seller who is willing, but not compelled, to sell and purchased by a purchaser who is willing, but not compelled, to purchase.
What is a related party? “Related parties” above includes not only individuals in the family sense of the term, but also owners of businesses and interrelated businesses.
