November 13, 2019
Advantage Title: Industry Bulletin 2019-07
UPDATE - NYS Law Chapter 297: Transfer Tax Returns for Residential Real Property Owned or Purchased By a Limited Liability Company
As previously noted in Industry Bulletins 2019-04, 2019-05 and 2019-06, an amendment to New York Tax Law § 1409(a) (“Tax Law”) and the addition of subdivision (h) to § 11-2105 of the NYC Administrative Code (“Code”), both effective as of September 13, 2019, created new recording requirements for deeds transferring certain types of real property from or to a limited liability company (“LLC”). On October 23, 2019, the New York State Department of Taxation and Finance (“NYS Department”) issued revised guidance (“Revised Guidance”) superseding previous guidance (“Previous Guidance”) issued by the NYS Department in late September. The Revised Guidance can be found at the following link: https://www.tax.ny.gov/bus/transfer/rptidx.htm#conveyances. On November 4, 2019, the NYS Department issued a technical memorandum (“TSB”), which can be found here, explaining changes to the filing requirements and required disclosure (“NYS Disclosure”) for the NYS real estate transfer tax for certain conveyances involving LLCs.
The language in the TSB regarding the type of property affected by the Tax Law is consistent with the language in the Revised Guidance. Specifically, the TSB states that the Tax Law is applicable to “… a deed transfer of a building containing one- to four- family dwelling units.” This language is a significant change from the Previous Guidance which stated that the Tax Law is applicable to a conveyance of a “…one- to four-family residence or a residential condominium.” The phrase “residential condominium” is noticeably absent in the Revised Guidance and the TSB. Based on informal discussions with a representative at the Department, the absence of “residential condominium” in the TSB is deliberate. The TSB also formalizes the Department’s position that the Tax applies to mixed-use property to the extent that the real property is improved by a building containing not more than four family dwelling units. The TSB contains an example of a fact pattern which would trigger the requirement for the NYS Disclosure.
The NYC Department of Finance (“NYC DOF”) posted information (“NYC Guidance”) on its website regarding the disclosure (“NYC Disclosure”) required by the addition to the Code. The NYC Guidance can be found at the following link: https://www1.nyc.gov/site/finance/taxes/property-real-property-transfer-tax-rptt.page. The NYS Department and the NYC DOF have reconciled their positions on the applicability of the Tax Law and the Code to conveyances of condominiums. As a result, the NYS Department and NYC DOF no longer require the NYS Disclosure and NYC Disclosure, respectively, for conveyances of condominiums.
The Company will keep you apprised of any developments.
Please contact Drew Steigler, Chief Underwriting Counsel, at
631.424.6100 or firstname.lastname@example.org
with any questions.