California - Local jurisdiction documentary transfer tax applies to certain changes of ownership or control

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June 2017


On June 29, 2017, the California Supreme Court affirmed a decision by the Court of Appeal for the Second District and held that California Revenue and Taxation Code section 11911 authorizes counties and cities to impose a documentary transfer tax (DTT) on the written conveyance of an interest in a legal entity that owns real property and results in a change in ownership of the real property under California Revenue and Taxation Code section 64, subdivisions (c)(1) or (d) (the state’s property tax).

The decision will likely result in the imposition of a controlling interest transfer tax across California in counties and cities that do not already impose the DTT on transfers of legal entity interests. It remains unclear how historical transactions will be treated and, if the decision applies retroactively, whether taxpayers will be permitted to voluntarily disclose historical conveyances potentially subject to the DTT without the imposition of penalties.

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Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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