Is an Electronic Real Estate Transfer Return needed on Sheriff Sales?
Yes. A Real Estate Transfer Return is due for all Sheriff's Deeds, even if the deed is exempt from transfer fee.
When is a transfer fee due on a Sheriff's Deed?
A transfer fee is due whenever a third party is the successful bidder. A third party is defined as someone who is not holding a lien or mortgage on the property or, if under a land contract, is not the seller (vendor). Usually lien holders are listed as plaintiffs or defendants in the foreclosure judgment. If the original mortgage lender assigns the mortgage to another entity, that entity is now the lienholder.
When a transfer fee is due on a sheriff's sale, it is calculated on the successful bid amount.
When is there no transfer fee due on a Sheriff's Deed?
The exemption under state law (sec. 77.25(14), Wis. Stats.), applies when the conveyance is "Under a foreclosure or a deed in lieu of a foreclosure to a person holding a mortgage or to a seller under a land contract." To qualify for the exemption under the Sheriff's Deed, the grantee must be the mortgage holder, the holder of the vendor's interest in a land contract, or the owner of the property.
If a mortgage is assigned, does the mortgage assignment have to be recorded for state law (sec. 77.25(14), Wis. Stats.), to apply?
Generally, yes. The assignment does not have to be recorded to qualify for the exemption if the assignee is one of the following:
Insurer (ex: HUD, Fannie Mae, Freddie Mac, VA)
Another lender who actually holds the mortgage, if plaintiff was acting as servicing agent
Subsidiary of the lender due to regulations prohibiting the lender from holding assets
Note: The Wisconsin Department of Revenue takes this position to allow assignment to the lender's subsidiary whether the assignment occurs before or after the sale is confirmed by the court. In the past, if the assignment was after the sale, a transfer fee was due on a conveyance to a subsidiary under administrative rule (Tax 15.03, Wis. Adm. Code).
How do I complete the transfer return for a Sheriff's Deed?
Include the proper name for Grantor (the debtor's/title holder's) name and his/her Social Security Number (SSN). If you cannot find the debtor's SSN and address after a reasonable search, you may enter all "9's" on the return. Since the Sheriff is acting as trustee/fiduciary for the debtor and does not have title to the property, the Sheriff is not the grantor and the exemption per state law (sec. 77.25(2), Wis. Stats.),
cannot be used. Place the Sheriff's name, address and phone number as the grantor's agent. Complete the remaining sections of the return the same way you complete other conveyances.
The successful bidder at a sheriff's sale is an LLC. The only members of the LLC are the defendants, who are also spouses. They purchased their own house in the name of the LLC. The LLC was in existence prior to the commencement of the foreclosure and the sheriff's sale. Is this transfer exempt under state law (sec. 77.25(15s), Wis. Stats.), since the spouses are the only members of the Grantee (LLC)?
No. The conveyance is not exempt per state law (sec. 77.25(15s), Wis. Stats.), since Exemption 15s requires the conveyance be for no consideration. A purchase at a sheriff's sale does not meet this requirement. Sec. 77.25(14), Wis. Stats., does not apply since the LLC is considered a "third party" since it was not the mortgage holder. However; it would be exempt under the "two-step" method if the individuals are the successful bidders and take title using Exemption 14 and then convey into their LLC using Exemption 15s.
Does a transfer return need to be filed when an IRS Certificate of Sale of Seized Property (Form 2435) is recorded?
No. This document is used to place a lien on the property for 180 days as a redemption period for the person whose property was seized. If after the 180 days nothing was done to redeem the property, the IRS gives the buyer a District Quit Claim Deed and transfer return to record. This transaction is usually subject to transfer fee. The exemption for conveyance from a governmental agency under state law (sec. 77.25(2), Wis. Stats.), does not apply since the government did not have title and is only acting as a fiduciary in passing the title from the person the property was seized from to a third-party buyer. This is similar to a sheriff's sale where the transfer fee is due.
How is the transfer fee calculated on a "short sale" when the amount owed on a mortgage exceeds the purchase price?
The transfer fee is calculated on the amount paid (cash or equivalent) plus any liens, including any back taxes. (sec. 77.21(3)(a), Wis. Stats.)
Example: $150,000 is remaining on the mortgage from an original sale of $165,000 ($15,000 down payment with no additional equity paid during the loan's life) and the new "short sale" is for $135,000. The fee is on $135,000 (sale price to the new owner). Any "short" the former owner owes to the bank is excluded when calculating the transfer fee.
The Wisconsin Department of Revenue requires that Social Security Numbers (SSN/FEIN) are reported on the transfer return. Is this a law?
Yes. Congress enacted section 1211 of the Tax Reform Act of 1976, P.L. 94-455, Title 42 U.S.C. § 405(c)(2)(C), which authorizes the use of an SSN/FEIN by a state, "in the administration of any tax, general public assistance, driver's license, or motor vehicle registration law within its jurisdiction."
If there is more than one grantor or grantee, do I have to list a Social Security Number for each grantor and grantee?
Yes. You must include a Social Security Number (SSN) and address for each grantor and grantee. The only exception is for a spouse with the same last name. If you include both first names in the same box, only one SSN is necessary.
If an individual buys property and does not have a Social Security Number, what does he or she report on the return?
You must provide a taxpayer identification number on a Wisconsin Electronic Real Estate Transfer Return. If you do not have a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN), or you are not legally required to have one, enter all 9s in the box.
To determine whether you are required to have a SSN or ITIN, review the
U.S. Tax Guide for Aliens, Publication 519.
If a grantor refuses to provide his or her Social Security Number, how can I record the deed without this information?
If the grantor refuses to give his/her Social Security Number, enter all 9s in the boxes.
How does the Wisconsin Department of Revenue (DOR) ensure the eRETR information, especially the Social Security Numbers (SSN) and FEIN, are secure from identity theft?
The eRETR is confidential under state law (sec. 77.265, Wis. Stats.). DOR restricts access to an eRETR and the information on it. When the eRETR is used, SSNs only appear in the saved file on the preparer's computer and on the printed summary section. If the printed summary is provided at the closing, the SSNs should be removed from these copies. After the eRETR is submitted to DOR, we transfer the SSNs to a different server only accessed by DOR employees. Local government officials and other state agencies do not have access to the servers with the SSNs.
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