Date: Tue, 7 Nov 2006 11:58:08 -0500
See below email from Probate list. Someone on our side should be able to
answer this for Will.
Andrea Geraghty
Attorney at Law
Two Gateway Center
603 Stanwix Street . Suite 2050
Pittsburgh, PA 15222
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p 412-232-7070
f 412-232-7071
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From: probatetrust-bounce_at_list.pabar.org
[mailto:probatetrust-bounce_at_list.pabar.org] On Behalf Of Will du Pont
Sent: Tuesday, November 07, 2006 11:04 AM
To: probatetrust_at_list.pabar.org
Subject: [probatetrust] Realty tfr tax exemption vs. 1031 exchange
Here's one that is a little out of our bailiwick, but maybe some of you have
experience in this particular aspect of PA Realty Transfer Tax law or can
point me to a listserve for the real estate bar (or dirt lawyers as Andrea
G. calls them).
I recently acquired a "replacement" rental property (in DE) and transferred
ownership of three "relinquished" properties to a shell LLC in order to
accommodate an IRS section 1031 reverse, deferred exchange. When I
transferred title to two PA properties to the LLC, I claimed RTT exemption
as a transfer from principal to agent or straw party, per section
1102-C.3(11)(i) of the PA Realty Transfer Tax Act. I negotiated the sale of
the two properties to my tenants, but used the LLC (which I created but is
wholly owned by a professional exchange agency) as the intermediary.
PA is saying that my transfer to the intermediary is a taxable transfer for
RTT purposes and pointed me to Rev. Bulletin RTT 2006-1. I say that flies
in the intent of exempting transfers to straw parties for the purpose of
accommodating a sale/exchange.
Of course, the sale to the tenant by the intermediary is taxable, but it
doesn't seem right to tax the "sale" twice. Any help? Thanks.
--Will du Pont
William B. du Pont Jr.
Herdeg, du Pont & Dalle Pazze, LLP
1201 Orange Street, Suite 500
Wilmington, DE 19801-1140
(302) 655-6500
<file:///\\www.lawyers.com\dellaw> www.lawyers.com/dellaw
wdupont_at_dellaw.com
