Improvement on Lease Land

1. Is a conveyance of improvements on leased land subject to transfer fee?

Interest Exchange

1. Is a conveyance of real estate to or from a partnership, limited partnership, corporation or limited liability company in exchange for a partnership interest, limited partnership interest, shares of a corporation or membership interest exempt from transfer fee under Exemption 6q?


2. Is a conveyance of real estate between two entities exempt from transfer fee under Exemption 6q?


3. Is a deed filed to give notice of an interest exchange under state law (sec. 178.1131, 179.1131, 180.1102, 181.1131, or 183.1031 Wis. Stats.), exempt from transfer fee?

Joint Tenancy

1. I'm preparing a transfer tax return to accompany a deed where the owner of a single-family residence is a single male. He requested that I prepare a deed from him (as sole owner) to himself and his cohabitant (as joint tenants). The couple does not plan to marry. I have the following questions:
   1. When figuring the transfer fee, should I figure it on half the value of the real estate or should I figure it on the entire value?
   
   
   2. Grantor/Grantee relationship: Is it none? Or is it "Other" with the explanation of "cohabitants"?
   
   
   3. Type of Transfer: Should I select "Other" and explain it as a "Conveyance" with no explanation?
   
   
   4. Ownership interest transferred: Should I select "Full" or "Other"? Should I explain it as "Grantor is conveying a half interest to Grantee?"
   
   
   5. Does Grantor retain any of the following rights: Should I select "None" (since he is giving up his rights as an individual owner and conveying them to himself and his cohabitant as joint tenants)? Or should it be "Other" and explained with "Grantor retains a half interest"?


2. In filing a quit claim deed from a surviving spouse disclaiming joint tenancy in the real estate of the decedent under state law (sec. 854.13(2) (b), Wis. Stats.), the effect is as though the surviving joint tenant predeceased the decedent. (a) Is a transfer return required? (b) Is a return required when the decedent's children disclaim any interest in the estate and have no prior interest or title in the real estate?

Improvements on Lease Land

1. Is a conveyance of improvements on leased land subject to transfer fee?

   Yes. A conveyance of improvements on lease land – regardless of the length of the lease or remaining time of the lease – is subject to transfer fee imposed under sec. 77.22(1), Wis. Stats.

   Sec. 77.21(1m), Wis. Stats. defines real estate …to include improvements on leased land.

   Sec. 70.03(1), Wis. Stats. defines real estate to include not only the land but all of the buildings and improvements thereon, and all fixtures and rights and privileges appertaining thereto…

Interest Exchange

1. Is a conveyance of real estate to or from a partnership, limited partnership, corporation or limited liability company in exchange for a partnership interest, limited partnership interest, shares of a corporation or membership interest exempt from transfer fee under Exemption 6q?

   No. A conveyance of real estate to a partnership, limited partnership, corporation or limited liability company in exchange for partnership interest, limited partnership interest, shares of a corporation or membership interest do not meet any of the statutory requirements of an interest exchange under state law (sec. 178.1131, 179.1131, 180.1102, 181.1131, or 183.1031 Wis. Stats.), and is not exempt from transfer fee under sec. 77.25(6q), Wis. Stats.

   Note: The only possible exemption for a conveyance of real estate to or from a:

   • Partnership, limited partnership or limited liability partnership is sec. 77.25(15m), Wis. Stats.
   • Corporation is sec. 77.25(15), Wis. Stats.
   • Limited liability company is sec. 77.25(15s), Wis. Stats.
   
   

   A conveyance between entities does not meet any of the statutory requirements of the above listed exemptions and requires a transfer fee to be paid per sec. 77.22(1), Wis. Stats.



2. Is a conveyance of real estate between two entities exempt from transfer fee under Exemption 6q?

   No. A conveyance of real estate between entities does not meet any of the statutory requirements of an interest exchange under state law (sec. 178.1131, 179.1131, 180.1102, 181.1131, or 183.1031 Wis. Stats.), and is not exempt from transfer fee under sec. 77.25(6q), Wis. Stats.



3. Is a deed filed to give notice of an interest exchange under state law (sec. 178.1131, 179.1131, 180.1102, 181.1131, or 183.1031 Wis. Stats.), exempt from transfer fee?

   Yes. A deed filed to give notice of an interest exchange under state law (sec. 178.1131, 179.1131, 180.1102, 181.1131, or 183.1031 Wis. Stats.) is exempt from transfer fee per state law (sec. 77.25(6q), Wis. Stats.).

   In order for the exemption to apply, it must:

   • Meet all the statutory requirements
   • Be submitted to the Wisconsin Department of Financial Institutions (DFI) on the prescribed form for review
   • Be accepted by DFI
   
   

   Wisconsin Statute References

   Sec. 77.25(6q) – "Pursuant to an interest exchange under sec. 178.1131, 179.1131, 180.1102, 181.1131, or 183.1031."

   Sec. 178.1131 – Interest exchange authorized

   (1) A domestic partnership may acquire all of one or more classes or series of interests of another domestic or foreign entity pursuant to ss. 178.1131 to 178.1135 and a plan of interest exchange if the interest exchange is permitted under the governing law applicable to the partnership and the acquired entity.

   (2) All of one or more classes or series of interests of a domestic partnership may be acquired by another domestic or foreign entity pursuant to ss. 178.1131 to 178.1135 and a plan of interest exchange if the interest exchange is permitted under the governing law applicable to the acquiring entity and the partnership.

   Sec. 179.1131 – Interest exchange authorized

   (1) A domestic partnership may acquire all of one or more classes or series of interests of another domestic or foreign entity pursuant to ss. 179.1131 to 179.1135 and a plan of interest exchange if the interest exchange is permitted under the governing law applicable to the partnership and the acquired entity.

   (2) All of one or more classes or series of interests of a domestic partnership may be acquired by another domestic or foreign entity pursuant to ss. 179.1131 to 179.1135 and a plan of interest exchange if the interest exchange is permitted under the governing law applicable to the acquiring entity and the partnership.

   Sec. 180.1102 – Interest exchange authorized

   (1) A domestic corporation may acquire all of one or more classes or series of interests of another constituent entity pursuant to ss. 180.1102, 180.11021, 180.11032, 180.1105, and 180.1106 and a plan of interest exchange if the interest exchange is permitted under the governing law share applicable to the corporation and the acquired entity.

   (1m) All of one or more classes or series of interests of a domestic corporation may be acquired by another constituent entity pursuant to ss. 180.1102, 180.11021, 180.11032, 180.1105, and 180.1106 and a plan of interest exchange if the interest exchange is permitted under the governing law applicable to the acquiring entity and the corporation.

   (2m) A domestic or foreign entity may exchange interests with a domestic corporation pursuant to ss. 180.1102, 180.11021, 180.11032, 180.1105, and 180.1106 and a plan of interest exchange if the interest exchange is permitted under the governing law of each constituent entity and each constituent entity approves the plan of interest exchange in the manner required by its governing law.

   Sec. 181.1131 – Interest exchange authorized

   (1) A domestic corporation may acquire all of one or more classes or series of interests of another domestic or foreign entity pursuant to ss. 181.1131 to 181.1135 and a plan of interest exchange if the interest exchange is permitted under the governing law applicable to the corporation and the acquired entity.

   (2) All of one or more classes or series of interests of a domestic corporation may be acquired by another domestic or foreign entity pursuant to ss. 181.1131 to 181.1135 and a plan of interest exchange if the interest exchange is permitted under the governing law applicable to the acquiring entity and the corporation.

   Sec. 183.1031 – Interest exchange authorized

   (1) A domestic limited liability company may acquire all of one or more classes or series of interests of another domestic or foreign entity pursuant to ss. 183.1031 to 183.1035 and a plan of interest exchange if the interest exchange is permitted under the governing law applicable to the limited liability company and the acquired entity.

   (2) All of one or more classes or series of interests of a domestic limited liability company may be acquired by another domestic or foreign entity pursuant to ss. 183.1031 to 183.1035 and a plan of interest exchange if the interest exchange is permitted under the governing law applicable to the acquiring entity and the limited liability company.

   Secs. 178.1101(16), 179.1101(16), 180.1100(4), 181.1100(4) and 183.1001(16) – define "interest" as a:

   • Share in a business corporation
   • Membership in a nonprofit or nonstock corporation
   • Partnership interest in a general partnership
   • Partnership interest in a limited partnership
   • Membership interest in a limited liability company
   • Membership interest or stock in a general cooperative association
   • Membership interest in a limited cooperative association
   • Membership in an unincorporated nonprofit association
   • Beneficial interest in a statutory trust, business trust, or common-law business trust
   • Comparable interest in any other type of unincorporated entity
   
   

   Note: An "Interest" does not include real estate.

   Interest exchange statutory requirements:

   • Secs. 178.1132, 179.1132, 180.11021, 181.1132 and 183.1032 Wis. Stats. – define what information the plan of interest exchange must contain
   • Secs. 178.1133(1), 179.1133(1), 180.11031, 181.1133(1) and 183.1033(1), Wis. Stats. – define how the plan of interest exchange is approved by the acquired entity
   • Secs. 178.1134, 179.1134, 180.1105, 181.1134 and 183.1044 Wis. Stats. – require a plan of interest exchange must be delivered to DFI for approval
   • A plan of interest exchange is submitted to DFI on Form 52 Articles of Share or Interest Exchange
   
   

Joint Tenancy

1. I'm preparing a transfer tax return to accompany a deed where the owner of a single-family residence is a single male. He requested that I prepare a deed from him (as sole owner) to himself and his cohabitant (as joint tenants). The couple does not plan to marry. I have the following questions:
   
   
   1. When figuring the transfer fee, should I figure it on half the value of the real estate or should I figure it on the entire value?

      Transfer fee is due on one-half of the fair market value since one-half of the value is being conveyed.

   2. Grantor/Grantee relationship: Is it none? Or is it "Other" with the explanation of "cohabitants"?

      Since either one applies, you may check either one or both. If you select "Other," you must provide an explanation.

   3. Type of Transfer: Should I select "Other" and explain it as a "Conveyance" with no explanation?

      You can check "Other" and explain it as "cohabitants."

   4. Ownership interest transferred: Should I select "Full" or "Other"? Should I explain it as "Grantor is conveying a half interest to Grantee?"

      Select "Other" and explain it as "Grantor is conveying a half interest to Grantee."

   5. Does Grantor retain any of the following rights: Should I select "None" (since he is giving up his rights as an individual owner and conveying them to himself and his cohabitant as joint tenants)? Or should it be "Other" and explained with "Grantor retains a half interest"?

      Select "Other" and explain it as "Grantor retains a half interest."

   
   
2. In filing a quit claim deed from a surviving spouse disclaiming joint tenancy in the real estate of the decedent under state law (sec. 854.13(2) (b), Wis. Stats.), the effect is as though the surviving joint tenant predeceased the decedent. (a) Is a transfer return required? (b) Is a return required when the decedent's children disclaim any interest in the estate and have no prior interest or title in the real estate?

   (a) Yes. A transfer return is required; however, the spousal deed is exempt from fee per state law (sec. 77.25(11), Wis. Stats.), as being "By will, descent or survivorship." It is assumed that spouses may also have an interest in the property under marital property law.

   (b) No. For the children, since they had no prior interest or title in the property, this is exempt from return and fee, according to sec. 77.21 (1), Wis. Stats.

   Note: You should make a statement on the document similar to, "This is a disclaimer only and not a conveyance as defined by sec. 77.21(1), Wis. Stats, and therefore is exempt from fee imposed under sec. 77.22(1), Wis. Stats." If they had an interest in the property, then the use of the exemption per sec. 77.25(11), Wis. Stats., would apply. We instructed the Register of Deeds that they should not accept exempt recordings verbally and the person recording the document should place the exemption on the document when no return is furnished.

Questions?

Contact us at eretr@wisconsin.gov.