Several states have recently addressed real property transfer taxes. Maryland extended its related party exemption to transactions involving limited liability companies. The other states, however, enacted laws that increased rates or expanded the scope of their taxes. Pennsylvania increased the scope of taxable ‘real estate company’ transactions. Virginia increased the tax in certain localities. Finally, Monterey County, California, enacted legislation that allows a ‘change of ownership’ to qualify for a taxable real property transfer.
Taxpayers transferring real property, or transferring ownership interests in entities holding real property, should be aware of these changes as well as the potential for transfer taxes and exemptions provided across the states.