Real Estate Transfer Fee Common Questions N-P

Non-Profit Organizations

  1. What exemption applies for a conveyance to or from a nonprofit organization or church?

  2. What does the exemption sec. 77.25(20), Wis. Stats. - "Made under 184.15" mean?

Parcels

  1. There are two adjoining parcels with two tax parcel numbers. Before a garage can be built on the vacant parcel, the parcels must be combined under one legal description for zoning purposes. Does a transfer return need to be filed when filing the deed combining the lots?

  2. Is the property lister responsible for adding or deleting parcel numbers on an Electronic Real Estate Transfer Return that are wrong, incomplete or missing?

  3. My neighbor and I had a new survey done and we need to record a deed correcting the lot line between us. Is a transfer return required for a lot line correction?

Parent Child

  1. A mother sold the family home to her son and daughter-in-law. Is there a transfer fee due on this amount?

  2. If parents gift their home to their son and daughter-in-law, is it exempt under state law (sec. 77.25(8), Wis. Stats.)?

  3. My father is giving my husband and I a home valued at $121,000. We are assuming the mortgage to pay the remaining $77,000. Are we exempt from fee and how do we complete the eRETR?

  4. A father and two sons own one-third each on three properties. One son is deeding his one-third interest in each property to his father and brother. The mortgage is $360,000 and the real estate value is $300,000 for the properties. What is the value subject to transfer fee?

Partition

  1. Two individuals own a piece of land that is now split into two parcels. The individuals now own two parcels that they would like to transfer so each individual owns his own parcel. Is a transfer fee due or can an exemption be used?

  2. An aunt, uncle, niece and nephew all own a single parcel together and want to partition it into four equal lots, with one lot going to each party. Is a transfer fee due, or is there an exemption available?

  3. Two single-member LLCs hold title as tenants-in-common to six condominium units and are interested in splitting up these properties. Is a transfer fee due on the value of each condo unit, or does Exemption (5), on partition apply?

  4. How do you complete the transfer returns when there is an uneven division of real estate among co-owners? Assume three siblings jointly own three properties: Property 1 has a fair market value of $60,000, and properties 2 and 3 have a value of $90,000 each. Sibling A receives property 1, sibling B receives property 2, and sibling C receives property 3.

Partnerships

  1. Is a quit claim deed for a partnership filing or canceling a statement of qualification effective July 1, 2016 or after under state law (sec. 178.0901, Wis. Stats.), subject to a transfer fee?

  2. Is a quit claim deed for a general partnership registering to be a limited liability partnership effective prior to July 1, 2016 under state law (sec. 178.40, Wis. Stats.), subject to a transfer fee?

  3. Can a partnership convert to a limited liability company with an effective date of July 1, 2016 or after, and be exempt per state law (sec. 77.25(6m), Stats.)?

  4. Can a general partnership convert to a limited liability company with an effective date prior to July 1, 2016 and be exempt per state law (sec. 77.25(6m), Stats.)?

  5. Is a quit claim deed from a general partnership to a limited liability company subject to a transfer fee?

  6. Would the transfer of real estate from a partnership to partners who are not related be subject to a transfer fee?

  7. Is a transfer of real estate from a partnership to partners who are not related subject to a transfer fee?

Penalties

  1. If a transfer fee amount due is understated or an improper exemption is taken, can the Wisconsin Department of Revenue (DOR) assess a penalty? Can the penalty be waived?

Personal Property

  1. A real estate parcel being sold has items listed as "personal property" for the property tax exemption as defined by Chapter 70. Are these items also exempt from transfer fee?


Non-Profit Organizations

  1. What exemption applies for a conveyance to or from a nonprofit organization or church?

    There is no exemption for conveyances to or from a nonprofit organization or church per administrative rule (Tax 15.03(5), Wis. Adm. Code). The fee is based on the property's fair market value if the conveyance is a gift or deed of nominal consideration. If the conveyance is a sale, the sales price should be used.

  2. What does the exemption sec. 77.25(20), Wis. Stats. - "Made under 184.15" mean?

    1997 Wisconsin Act 140 adopted the Uniform Unincorporated Nonprofit Association Act. The Act defines a nonprofit association as an unincorporated organization consisting of three or more "members" joined by mutual consent for a common, nonprofit purpose and permits the nonprofit association, in its own name, to acquire, hold, encumber or transfer real or personal property. Prior to this section, property was held by a fiduciary for the nonprofit association.

    Exemption (20) allows the fiduciary to convey the vested estate or interest to the nonprofit association in its own name per "184.15 Transfers by a Fiduciary" without incurring a transfer fee.

Parcels

  1. There are two adjoining parcels with two tax parcel numbers. Before a garage can be built on the vacant parcel, the parcels must be combined under one legal description for zoning purposes. Does a transfer return need to be filed when filing the deed combining the lots?

    No. If the same entity or individual is listed as the owner of the two parcels, ownership is not changing and real estate interest is not conveyed. The document should include a statement, such as "This document is intended to combine the legal description of two parcels under the same ownership and is not a conveyance per sec. 77.21(1), Wis. Stats."

  2. Is the property lister responsible for adding or deleting parcel numbers on an Electronic Real Estate Transfer Return that are wrong, incomplete or missing?

    No. However, it is correct that the property lister can edit parcel numbers for accuracy. It is very important the receipt "mirrors" the document for grantors, grantees and parcels. The property lister and the Wisconsin Department of Revenue are not responsible for completing the transfer return by adding parcels. It is the filer's responsibility to submit a complete return. The eRETR business rules insure all required items are completed. However, eRETR cannot check that all grantors, grantees and parcels are included.

    Criteria for an Electronic Real Estate Transfer Return (eRETR):

    • All parcels listed on the document are on the Receipt

    • When there are five or fewer parcels, each must be listed in a separate parcel section (Add Parcel)

    • When there are more than five, the first five must be listed separately under "Parcels" and the remainder may be listed separately under "Parcels"

    • Note: If your county does not require parcel numbers on the document (they are required on the return), you can verify the property using the legal description.

    For more information on eRETR criteria, visit: revenue.wi.gov/Pages/Publications/slf-pe100e.aspx

  3. My neighbor and I had a new survey done and we need to record a deed correcting the lot line between us. Is a transfer return required for a lot line correction?

    Yes. You must submit a transfer return when correcting a lot line. Depending on how it is recorded, you could do one of the following:

    • Correct the previously recorded legal description, which is exempt from fee under state law (sec. 77.25(3), Wis. Stats.)

    • Convey real estate having a value of $1,000 or less, which is exempt from fee under state law (sec. 77.25(13), Wis. Stats.)

Parent Child

  1. A mother sold the family home to her son and daughter-in-law.  Is there a transfer fee due on this amount?

    Yes. Exemption (8) not only requires that the conveyance be between a parent and child, it also requires that the transfer be for no consideration. Because this is a sale and there is consideration, a transfer fee is due.

  2. If parents gift their home to their son and daughter-in-law, is it exempt under state law (sec. 77.25(8), Wis. Stats.)?

    Yes. Exemption 77.25(8) applies: "Between parent and child, stepparent and stepchild, parent and son-in-law or parent and daughter-in-law for nominal or no consideration."

    Note: At the time of conveyance, if there is any kind of mortgage attached to the property, then there is consideration and a transfer fee is due on the debt.

  3. My father is giving my husband and I a home valued at $121,000. We are assuming the mortgage to pay the remaining $77,000. Are we exempt from fee and how do we complete the eRETR?

    The exemption under sec. 77.25(8), Wis. Stats., requires the conveyance to be between parent and child and for no consideration. Since the assumption of the remaining mortgage is involved, your situation does not meet the requirement of "no consideration." You must pay the transfer fee on the $77,000.00. Exemption (8) would apply as a gift for the equity of $44,000.00 conveyed.

    Complete the eRETR as follows:

    • Transfer type: select "Sale" and "Gift"

    • Financing: check "Assumed existing financing"

    • Total value of real estate transferred: $121,000

    • Value subject to fee: $77,000

    • Select Exemption (8)

  4. A father and two sons own one-third each on three properties. One son is deeding his one-third interest in each property to his father and brother. The mortgage is $360,000 and the real estate value is $300,000 for the properties. What is the value subject to transfer fee?

    • Since there is no exemption for a conveyance between brothers, fair market value ($300,000) is used in determining half the transfer fee

    • Since the mortgage is consideration, the conveyances between the parent and child is subject to fee on the debt (mortgage $360,000) and is used in determining half the transfer fee

    • Equity conveyed by child to parent is covered by Exemption 8

    • Value subject to fee in this case is on $110,000. Calculated as follows: 1/2 of 1/3 of the fair market value for the brother to brother conveyance plus 1/2 of 1/3 of the mortgage balance for the father to son conveyance

Partition

  1. Two individuals own a piece of land that is now split into two parcels. The individuals now own two parcels that they would like to transfer so each individual owns his own parcel. Is a transfer fee due or can an exemption be used?

    If the value of each parcel is equal, then each of the two deeds being filed meets the requirements of the Exemption 5 (state law sec. 77.25(5) Wis. Stats.), for deeds of partition. Each parcel's value to be conveyed should be indicated on the transfer return as half the total value of the lot, since each party is conveying his/her half interest in the property to the other.  In such case, no transfer fee is due.
    Example: Each lot is valued at $50,000. On each transfer return, report $25,000 as the real estate value conveyed. Report $0 value subject to transfer fee, and claim Exemption (5).

  2. An aunt, uncle, niece and nephew all own a single parcel together and want to partition it into four equal lots, with one lot going to each party. Is a transfer fee due, or is there an exemption available?

    If the value of each parcel is equal, then these deeds being filed meet the requirements of Exemption (5), for a deed(s) of partition. The value conveyed for each transfer return is 3/4 of the total value of the other three lots they are conveying their one-fourth interest in to the one receiving the lot.

    Example: The original parcel is worth $120,000 and each resulting lot is valued at $30,000. For each transfer return, you would report $22,500 as the real estate value conveyed (3 conveying owners x 1/4 interest, each worth $7,500). Report $0 value subject to transfer fee, and claim Exemption (5).

  3. Two single-member LLCs hold title as tenants-in-common to six condominium units and are interested in splitting up these properties. Is a transfer fee due on the value of each condo unit, or does Exemption (5), on partition apply?

    No transfer fee is due if the total values of the interests each LLC receives are the same. Transfer fees are due if the values are unequal.

    Example: "LLC A will convey to LLC B units 3, 4 & 9, LLC B will convey to LLC A units 10, 11 and 12 plus $11,000 cash

    The exemption in sec. 77.25(5) for partition applies whether the co-owners are individuals, entities or a combination of either. Here the two owners are going to divide the six condo units between them. The exemption in sec. 77.25(5) Wis. Stats. for partition applies to the degree that  the partition is equal, but the cash boot of $11,000 is subject to transfer fee. The party receiving the cash boot, LLC A, is the party that owes the transfer fee because they are giving up more value of real estate than they are receiving, and are considered the grantor of the difference in value. The return for LLC A would use Exemption (5) as to the portion that qualifies as a partition, and a fee would be due on the cash boot of $11,000.

  4. How do you complete the transfer returns when there is an uneven division of real estate among co-owners? Assume three siblings jointly own three properties: Property 1 has a fair market value of $60,000, and properties 2 and 3 have a value of $90,000 each. Sibling A receives property 1, sibling B receives property 2, and sibling C receives property 3.

On three transfer returns, the values of the properties should be allocated as follows:

Property 1 to Sibling A:

Name
Value Prior

Value After

Value Change

Grantor: Sibling B

$20,000

$ 0.00

($20,000)

Grantor: Sibling C

$20,​​000

$ 0.00

($20,000)

Grantee: Sibling A

$20,000

$60,000

$40,000

Total FMV

$60,000

$60,000

$0

Property 2 to Sibling B:

Name
Value Prior

Value After

Value Change

Grantor: Sibl​ing A

$30,000

$ 0.00

($30,000)

Grantor: Sibling C

$30,000

$ 0.00

($30,000)

Grantee: Sibling B

$30,000

$90,000

$60,000

Total FMV

$90,000

$90,000

$0

Property 3 to Sibling C:

Name
Value Prior

Value After

Value Change

Grantor: Sibling A

$30,000

$ 0.00

($30,000)

Grantor: Sibli​​ng B

$30,000

$ 0.00

($30,000)

Grantee: Sibling C

$30,000

$60,000

$60,000

Total FMV

$90,000

$60,000

$0

Summary

Name
Value Prior

Value After

Value Change

Sibling A

$80,000

$ 0.00

($20,000)

Sibli​ng B

$80,000

$ 0.00

$10,000

Sibling C

$80,000

$60,000

$10,000

Total FMV

$240,000

$60,000

$0

Example summary - in a true partition, there is no gain or loss of value of ownership interest; the property is divided equally in value among the owners. In this example, sibling A conveyed an interest in value of $20,000. The fee due on the value of $20,000 is allocated on the transfer returns for the deeds to Properties 2 and 3, where sibling A is the grantor. Siblings B and C gained an interest over all; therefore, they did not "convey" a value in the real property and are not subject to transfer fee per state law (sec. 77.25(5), Wis. Stats.).

Completing the returns for the deed of:

    Property 1 from B and C to Sibling A

  1. Type of Transfer: Check "Other" and explain "partition"

  2. Total value of Real Estate transferred: $40,000

  3. Transfer Fee: $0.00

  4. Exemption: (5) applies to B and C as there is no gain or loss in value

  5. Property 2 from A and C to Sibling B

  6. Type of Transfer: Check "Other" and explain "partition"

  7. Total value of Real Estate transferred: $60,000

  8. Transfer Fee: $30.00 (payable by A for $10,000, being one-half the $20,000 value differential)

  9. Exemption: (5)

  10. Property 3 from A and B to Sibling C

  11. Type of Transfer: Check "Other" and provide the explanation "partition"

  12. Total Value of Real Estate transferred: $60,000

  13. Transfer Fee: $30.00 (payable by A for $10,000, being one-half the $20,000 value differential)

  14. Exemption: (5)

Note: The property value is determined by each property's fair market value per state law (sec.77.21 (3), Wis. Stats.). Do not adjust the fair market value by the amount of any liens on the property.

Partnerships

  1. Is a quit claim deed for a partnership filing or canceling a statement of qualification effective July 1, 2016 or after under state law (sec. 178.0901, Wis. Stats.), subject to a transfer fee?

    No. A deed filed for a partnership filing or canceling a statement of qualification is exempt from transfer fee under state law (sec. 77.25(6d), Wis. Stats.).

  2. Is a quit claim deed for a general partnership registering to be a limited liability partnership effective prior to July 1, 2016 under state law (sec. 178.40, Wis. Stats.), subject to a transfer fee?

    No. A general partnership registering as a limited liability partnership, is exempt under state law (sec. 77.25(6d), Wis. Stats.). "Pursuant to partnerships registering as limited liability partnerships under sec. 178.40, Wis. Stats." Exemption (6d) is only for a general partnership registering as a limited liability partnership.

  3. Can a partnership convert to a limited liability company with an effective date of July 1, 2016 or after, and be exempt per state law (sec. 77.25(6m), Stats.)?

    Yes. Effective July 1, 2016 or after, the exemption applies when converting a business entity to another form of business entity under state law (sec. 178.1141, 179.76, 180.1161, 181.1161, or 183.1207, Wis. Stats).

    • Sec. 178.1141(1) - A domestic partnership may convert to another type of domestic entity, other than a domestic partnership, or to any type of foreign entity, under secs. 178.1141 to 178.1145, Wis. Stats., and a plan of conversion if the conversion is permitted under the governing law of the converting entity and the governing law to be applied to the converted entity

    • Sec. 178.1141(2) - A foreign or domestic entity, other than a domestic partnership, may convert to a domestic partnership under secs. 178.1141 to 178.1145, Wis. Stats., and a plan of conversion if the conversion is permitted under the governing law of the converting entity and the converted entity satisfies the definition of a partnership under this chapter immediately after the conversion

    • Sec. 179.76(1) - A domestic limited partnership may convert to another form of business entity if it satisfies the requirements under this section and if the conversion is permitted under the applicable law of the jurisdiction governing the organization of the business entity into which the domestic limited partnership is converting

    • Sec. 179.76(2) - A business entity other than a domestic limited partnership may convert to a domestic limited partnership if it satisfies the requirements under this section and if the conversion is permitted under the applicable law of the jurisdiction that governs the business entity

    • Sec. 180.1161(1)(a) - A domestic (business) corporation may convert to another form of business entity if it satisfies the requirements under this section and if the conversion is permitted under the applicable law of the jurisdiction governing the organization of the business entity into which the domestic corporation is converting

    • Sec. 180.1161(2)(a) - A business entity other than a domestic corporation may convert to a domestic corporation if it satisfies the requirements under this section and if the conversion is permitted under the applicable law of the jurisdiction that governs the business entity

    • Sec. 181.1161(1)(a) - A domestic (non-stock) corporation may register to be another form of business entity if it satisfies the requirements under this section and if the conversion is permitted under the applicable law of the jurisdiction governing the organization of the business entity into which the domestic corporation is converting

    • Sec. 181.1161(2)(a) - A business entity other than a domestic (non-stock) corporation may convert to a domestic corporation if it satisfies the requirements under this section and if the conversion is permitted under the applicable law of the jurisdiction that governs the business entity.

    • Sec. 183.1207(1)(a) - A domestic limited liability company may convert to another form of business entity if it satisfies the requirements under this section and if the conversion is permitted under the applicable law of the jurisdiction governing the organization of the business entity into which the domestic limited liability company is converting

    • Sec. 183.1207(2)(a) - A business entity other than a domestic limited liability company may convert to a domestic limited liability company if it satisfies the requirements under this section and if the conversion is permitted under the applicable law of the jurisdiction that governs the business entity

  4. Can a general partnership convert to a limited liability company with an effective date prior to July 1, 2016 and be exempt per state law (sec. 77.25(6m), Stats.)?

    No. Prior to July 1, 2016, the exemption only applies when converting a business entity to another form of business entity under state law (sec. 179.76, 180.1161, 181.1161, or 183.1207, Wis. Stats).

    Note: Prior to July 1, 2016 a general partnership can only register to be a limited liability partnership under state law (sec. 77.25(6d), Wis. Stats.), which provides, "Pursuant to partnerships registering as limited liability partnerships under sec. 178.40, Wis. Stats." and cannot be combined with sec. 77.25(6m), Wis. Stats.

  5. Is a quit claim deed from a general partnership to a limited liability company subject to a transfer fee?

    Yes. A conveyance between a limited liability company and a general partnership is subject to transfer fee.

  6. What are some examples of required relationships for Exemption (15) for corporations, (15m) partnerships and (15s) limited liability companies?

    All exemptions under sec. 77.25(15), (15m) and (15s), Wis. Stats. require the transfer to be between the entity and one or more owners "who are related to each other as spouses, lineal ascendants, lineal descendants, siblings or spouses of siblings." Examples that qualify for the exemption include the following:

    • Sole ownership: Sole individual

    • Spouses: Spouse and spouse

    • Lineal: Parent(s) and child(ren); parent(s) and son-in-law/daughter-in-law; or grandparent(s),
      parent(s) and grandchild(ren). Children includes adopted children but not foster children.

    • Siblings: Brother(s) and sister(s)

    • Spouses of Siblings: Brother(s) and sister(s)-in-law; sister(s) and brother(s)-in-law; brother(s) and brother(s)-in law; and sister(s) and sister(s)-in-law.

    Note:

    • Any combination of the above relationships would qualify

    • Uncles, aunts, nieces and nephews do not meet the relationship requirements

    • Exemptions apply whether or not the conveyance is to or from the entity

    • Transfer must, in all cases, be for no consideration other than the assumption of debt or the acquisition of an interest in the corporation, partnership or limited liability company

    • Conveyances from a corporation have an additional requirement. The corporation must have owned the property for three or more years.

  7. Is a transfer of real estate from a partnership to partners who are not related subject to a transfer fee?

    Yes. The only possible exemption for a conveyance between a partnership and the partners is the exemption in state law (sec. 77.25(15m), Wis. Stats.). Since the partners are not related as required by the exemption, a transfer fee is due on the total fair market value of the real estate conveyed.

    Exemption (15m) applies to transactions "Between a partnership and one or more partners if all of the partners are related to each other as spouses, lineal ascendants, lineal descendants, or spouses of siblings and if the transfer is for no consideration other than the assumption of debt or an interest in the partnership."

Penalties

  1. If a transfer fee amount due is understated or an improper exemption is taken, can the Wisconsin Department of Revenue (DOR) assess a penalty? Can the penalty be waived?

    A penalty assessed under state law (sec. 77.26(8), Wis. Stats.), "If the Department of Revenue determines that the value reported on the return under sec. 77.22 is understated by 25% or more, or that an exemption was improperly claimed under sec. 77.25, the department shall assess and collect a penalty of $25 or 25% of the additional fee due, whichever is greater, in the manner that additional transfer fees are collected."
    DOR cannot waive the penalty under state law (sec.77.26 (8) Wis. Stats.) The statute uses the word "shall," and in statutory interpretation the use of the word "shall" generally creates a mandatory duty. See F.M. Management Company Limited Partnership and F.M. Real Estate Company, LLC, v. Wisconsin Department of Revenue, 2007 WI App 125, Appeal No. 03-1536.

Personal Property

  1. A real estate parcel being sold has items listed as "personal property" for the property tax exemption as defined by Chapter 70. Are these items also exempt from transfer fee?

    Not necessarily. If an item of personal property is a fixture, is not exempt from the transfer fee, regardless of the property tax treatment. Fixtures, for transfer fee purposes, are defined as real property per state law (sec. 77.21(1m), Wis. Stats.), and are included in the total value of the real estate transferred. The value of such items are shown on the eRETR Fee Computation section, in both the "Total value of real estate transferred" and the "Value of property exempt from local property tax INCLUDED on Total Value of REAL ESTATE transferred" boxes.

    To determine if an item is a fixture, answer the following general questions:

    • Is the article physically attached to the premises?

      If the item is attached (it cannot be removed without causing substantial damage to the remaining realty), it is generally considered a fixture

    • Is there any special "adaptation" between the article and the premises?

      If the fixture or the realty is built "specially" to accommodate the other, it is generally considered a fixture. The item in question has less value if it is removed and taken somewhere else.

    • Is the item something normally intended to be a permanent part of the premises? 

      The test is what the average person normally intends for the item, not what the owner intended.

FOR MORE INFORMATION CONTACT:

MS 6-97
WISCONSIN DEPARTMENT OF REVENUE
Local Government Services Bureau
PO Box 8971
Madison, WI 53708-8971
Phone: (608) 264-6885 or (608) 266-1594
Fax: (608) 264-6897
Email additional questions to DORERealEstateTransfer@wisconsin.gov

​May 4, 2016