Real Estate Transfer Fee Common Questions

Exchange in Property

  1. A buyer bought vacant lot 1 and then decides he wants lot 2 instead. The buyer is now going to trade lot 1 back to the seller in exchange for lot 2. There will be no adjustment to the original purchase price. Can both exchange deeds be exempted under sec. 77.25(3), Wis. Stats.?
  2. Is a transfer fee due when trading vacant land for a four wheeler?
  3. Explain the concept of property exchanges and what to do if one exchanged property has a higher value than the other.

Exempt from Filing Return

  1. Under what circumstances may the Register of Deeds accept deeds (instruments of conveyance) without a transfer return?
  2. Is a conveyance of a cemetery lot subject to a transfer return and fee?
  3. If there is no statement on the document exempting the recording from a return, and the grantee's agent is insisting the document is exempt from the fee and return, can the Register of Deeds record the document?

Exchange in Property

  1. A buyer bought vacant lot 1 and then decides he wants lot 2 instead. The buyer is now going to trade lot 1 back to the seller in exchange for lot 2. There will be no adjustment to the original purchase price. Can both exchange deeds be exempted under sec. 77.25(3), Wis. Stats.?

    No. Transfer fees are due on both exchange deeds. Sec. 77.25(3) does NOT apply to a conveyance where the buyer has "changed his mind." An exchange of real property is subject to transfer fee per Tax 15.02(2), Wis. Adm. Code. There are two separate and distinct conveyances involved and the value should be separately determined for each. In the question above where the values are identical, there would be a fee on the fair market value of each lot as the values do not "offset" each other. In situations where the values differ: If "A" conveys parcel 1 to "B" worth $50,000 and "B" conveys parcel 2 to "A" worth $45,000 plus $5,000 cash, the fee for the "A" to "B" conveyance is on $50,000 and the "B" to "A" conveyance is on $45,000. Chapter Tax 15 can be found at: http://docs.legis.wisconsin.gov/code/admin_code/tax/15.pdf

  2. Is a transfer fee due when trading vacant land for a four wheeler?

    Yes, a transfer fee is due.  Giving something in exchange for right to real estate is a conveyance for consideration, regardless of the form of consideration. If the value of the four wheeler is less than the fair market value of the land, use the fair market value of the land as the amount subject to transfer fee.

  3. Explain the concept of property exchanges and what to do if one exchanged property has a higher value than the other.

    Two separate and distinct conveyances are involved and the value for each property is separately determined as described per sec. Tax 15.02(2), Wis. Adm. Code.

Exempt from Filing Return

  1. Under what circumstances may the Register of Deeds accept deeds (instruments of conveyance) without a transfer return?

    When a deed or other instrument is presented for recording without a transfer return, there must be some instruction on the document for the Register to form a judgment for acceptance or rejection.

    Example:

    • An option or right of first refusal to purchase: "This is an option (or right of refusal to purchase) and is not a conveyance as defined by sec. 77.21(1), Wis. Stats and is not subject to transfer return or fee imposed under sec. 77.22(1), Wis. Stats."
    • Exemptions (1), (2), (2r), (4) and (11) do not require the filing of a return. (Note: Exemption (2) requires a transfer return if the transferor is also a lender for a transaction using Exemption (2).) The exemption should be stated on the face of the deed: "Exempt from transfer return and fee per state law (sec. 77.25(X), Wis. Stats.)."
    • Exemption (10m) – filing a return is recommended, but optional

    Note: It is the responsibility of the parties to exempt the transaction from a transfer return and fee, not the Registers of Deeds. The Register of Deeds should never accept a verbal claim of exemption.

  2. Is a conveyance of a cemetery lot subject to a transfer return and fee?

    No. A conveyance of a cemetery lot is exempt from the transfer return and fee under administrative rule (tax 15.05(6), Wis. Adm. Code). The document should include language to the effect of "This is a cemetery lot and is exempt from transfer return and fee under administrative rule (tax 15.05(6), Wis. Adm. Code)" in keeping with the procedures of the Register of Deeds accepting documents without returns. Note: A conveyance of land for use as a cemetery is subject to a transfer return and fee per the same code.

  3. If there is no statement on the document exempting the recording from a return, and the grantee's agent is insisting the document is exempt from the fee and return, can the Register of Deeds record the document?
    • No. If the document is exempt from the return and fee requirement under state law (sec. 77.25(1), (2), (2r), (4) or (11), Wis. Stats.), there must be a statement on the front of the document exempting it.
      Example statement: "This document is exempt from a return and fee per state law (sec. 77.25(#), Wis. Stats.)." (Note: The # sign represents the exemption that applies.)
    • If the document is a lease (less than 99 years) or other non-conveyance of a real property interest, include a statement explaining the reason for no return on the document.
      Example statement:"This document is a lease of less than 99 years and not a conveyance as defined by state law (sec. 77.21(1), Wis. Stats.), and is exempt from a return and fee imposed (sec. 77.22(1), Wis. Stats.)"
    • If the document is designating or removing a TOD beneficiary under state law (sec. 705.15, Wis. Stats.), it is exempt from fee and filing a return is recommended, but optional.
      Example statement: "This document is designating or removing a TOD beneficiary under state law (sec. 705.15, Wis. Stats.) and is exempt from fee per state law (sec. 77.25(10m), Wis. Stats.)"

FOR MORE INFORMATION CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Equalization Bureau
P.O. Box 8971 MS 6-97
Madison, WI 53708-8971
Phone: (608) 264-6885 or (608) 266-1594
Fax: (608) 264-6897
E-Mail Additional Questions to eretr@revenue.wi.gov

June 3, 2014