How do you guys dodge your transfer taxes, when recording deeds for sub2 transactions? (in the states that have high transfer taxes like Delaware, and Pennsylvania)
Everytime a deed is recorded, the 3% tax is placed. For a 100K house, that is 3K out of pocket needed, just to transfer title.
You pay it.
You sure you want to screw with taxes?
Well, there are usually ways around things, which is why I asked. Im not looking to “screw” with taxes, I’m just wondering if there were any legal tax exemptions that I missed, involving deed recording, that would work in favor of investors. I know there are for family members, some death situations, and a few others. I guess I should have said it that way from the get go.
I would verify local law, but this is the way that I get around it. Close in a land trust and record the land trust with the original seller as the benificiary. Technically this is not a transfer since the original owner (seller) is the same as the benificiary of the Land Trust. Now you might have to pay a small fee to for a name change, but that is usually $50 or less.
Just make sure that if you close in a Land Trust in this manner that you also have the seller sign an Assignment of Beneficiary Rights to you (which does not get recorded)
Hope it helps
Gary
www.pse-re.com
Authorities are wise to these tricks. Transfer taxes are due on the change in beneficial interest. The same thing applies when selling an entity that owns the real estate. There may be a way around it. The best person to ask is a local attorney with specialized knowledge of land use and real estate taxes.