What is recorded on a Sub To deal?
Hi all,
Ok I am at a loss. On a sub to deal is there a deed recorded or something else? I am asking this because here in Pa there is a realty transfer tax that is paid anytime a deed needs recorded. Benefit of doing sub to is getting the deed, correct? So this means it has to be recorded for me to protect my interest, correct? The tax on this is not a small amount. So if I have to record the deed on every sub to deal that I do I have to pay this transfer tax which amounts to 1 1/2% to 2 1/2% of the sales price depending on the location of the property. If I had to pay this fee it would not make much sense to buy something subject to. I know this tax is used in other states so how is everyone getting around paying this tax. Is there something else that is recorded so that the transfer tax does not have to be paid. (Maybe the Grant, Bargain & Sale Deed, then again I am not really sure what that is really used for either) As you can see I am completely at a loss on this and have not been able to get an answer on this yet. I thought I really had a handle on sub to's until today. Am I simply missing something really stupid here or what?
Lost and Confused,
Jim
Hi Jim,
Yes we have that same problem in Las Vegas. A $100,000 property costs us $250.00 in real property transfer tax (RPTT) which must be paid at the time of recording.
Of course we recoup that money in the down payment when we resell, so it's no big deal. The costs of doing business.
Best of luck
John (LV)
Hi,
Hell if it was only $250 I would not be talking about it, but here it is a hell of a lot more than that. Now I am starting to wonder if doing sub to deals makes any sense here. Starting to wish I would of knew this before I started the sub to class. In your example a 100K sale might have 2k or more in transfer taxes. Hopefully someone out there has a solution to this.
Thanks,
Jim
Hi Jim,
Unless I'm missing something, your state's transfer rates are similar to mine. I'll double check to make sure.
What I'm hoping for is that you have moved that infamous decimal point one place too many and created a personal nightmare.
I'll let you know what I find out.
John (LV)
John,
Here is an example straight from the Recorder of Deeds site for Allegheny County in Pa. I don't know how I could be misunderstanding this example. It does not seem right because normal closings here would be unreal, but I have not been able to find anything that says anything different.
Thanks,
Jim
Real estate sold in Allegheny County is subject to both state and local realty transfer taxes. The tax is based on a percentage of the sales price. It is the duty of the party recording the deed to purchase state and local realty transfer taxes when he or she records the deed. This guide is provided to the public to assist you in determining the amount of transfer taxes due to the state and the various municipalities and school districts in Allegheny County.
Example #1:
House in
Shaler Twp Sells for
$40,000.00
State Tax 1% - $400.00
Shaler Twp ½% - $200.00
Shaler Area School District ½% - $200.00 TOTAL Realty Transfer Tax $800.00
Example #2:
House in the
City of Pittsburgh Sells for
$40,000.00
State Tax 1% - $400.00
City of Pittsburgh 1-½% - $600.00
Pittsburgh School District 1% - $400.00 TOTAL Realty Transfer Tax $1,400.00
The Recorder of Deeds Office is the agent for the collection of State Realty Transfer Taxes on all property sold in Allegheny County. The Recorder of Deeds Office is also agent for the collection of all Local Realty Transfer Taxes (municipal and school) on all property sold in Allegheny County. There are certain transactions, which are exempt from transfer taxes – for example, a transfer between parent and child is exempt from both state and local transfer taxes.
Mother sells house to daughter for $40,000 – No realty transfer taxes are owed.
Mother sells house for $1.00 – No realty transfer taxes are owed.
There are other exemptions. It is best to consult with an attorney or the PA Department of Revenue at 717-783-8104 to determine what these exemptions are.
If a deed does not have a real selling price on it, or it has a minimum price ($1.00 or $99.00), then the party recording the deed must fill out a "Statement of Value." These statements are available in the Recorder’s Office and online under Tax Forms. On the statement, you must disclose the actual selling price and the fair market value of the property. You must purchase state and local realty transfer taxes in accord with the selling price or fair market value listed on the statement of value. If the transfer is exempt from Realty Transfer Tax, the exemption must be explained on the statement of value.
IMPORTANT
A deed will not be accepted for recording unles
John,
Here is an example straight from the Recorder of Deeds site for Allegheny County in Pa. I don't know how I could be misunderstanding this example. It does not seem right because normal closings here would be unreal, but I have not been able to find anything that says anything different.
Thanks,
Jim
Real estate sold in Allegheny County is subject to both state and local realty transfer taxes. The tax is based on a percentage of the sales price. It is the duty of the party recording the deed to purchase state and local realty transfer taxes when he or she records the deed. This guide is provided to the public to assist you in determining the amount of transfer taxes due to the state and the various municipalities and school districts in Allegheny County.
Example #1:
House in
Shaler Twp Sells for
$40,000.00
State Tax 1% - $400.00
Shaler Twp ½% - $200.00
Shaler Area School District ½% - $200.00 TOTAL Realty Transfer Tax $800.00
Example #2:
House in the
City of Pittsburgh Sells for
$40,000.00
State Tax 1% - $400.00
City of Pittsburgh 1-½% - $600.00
Pittsburgh School District 1% - $400.00 TOTAL Realty Transfer Tax $1,400.00
The Recorder of Deeds Office is the agent for the collection of State Realty Transfer Taxes on all property sold in Allegheny County. The Recorder of Deeds Office is also agent for the collection of all Local Realty Transfer Taxes (municipal and school) on all property sold in Allegheny County. There are certain transactions, which are exempt from transfer taxes – for example, a transfer between parent and child is exempt from both state and local transfer taxes.
Mother sells house to daughter for $40,000 – No realty transfer taxes are owed.
Mother sells house for $1.00 – No realty transfer taxes are owed.
There are other exemptions. It is best to consult with an attorney or the PA Department of Revenue at 717-783-8104 to determine what these exemptions are.
If a deed does not have a real selling price on it, or it has a minimum price ($1.00 or $99.00), then the party recording the deed must fill out a "Statement of Value." These statements are available in the Recorder’s Office and online under Tax Forms. On the statement, you must disclose the actual selling price and the fair market value of the property. You must purchase state and local realty transfer taxes in accord with the selling price or fair market value listed on the statement of value. If the transfer is exempt from Realty Transfer Tax, the exemption must be explained on the statement of value.
IMPORTANT
A deed will not be accepted for recording unles
RERagsToRiches,
Jim, you have my cell number so give me a call or e-mail me I will walk you through a legal proceedure you can take in PA regarding transfer taxes.
There are other students of mine doing Subject To deals in PA.
John $Cash$ Locke
Finally the master appears. I will give you a call John. Why did my post show up 3 times???????
Thanks,
Jim