Real Estate Transfer Fee Common Questions

Gifts

  1. Is a gift of real estate to a university or college foundation that funds research and scholarships exempt from a transfer return and transfer fee under sec. 77.25(2g), Wis. Stats.?
  2. If I give my nephew a house, is a transfer return and fee due?

General Partnerships

  1. Is a quit claim deed for a conversion from a general partnership to the limited liability partnership subject to a transfer fee?
  2. Is a quit claim deed from a general partnership to a limited liability company subject to a transfer fee?

Government Agencies

  1. Are all sales to a governmental agency exempt from fee under sec. 77.25(12), Wis. Stats, pursuant to or in lieu of condemnation?
  2. Is the following satisfaction of a land contract exempt per sec. 77.25(17), Stats? A city sells property to an individual on land contract and the transfer return (required since the transferor is the lender) was filed using Exemption (2). Later the city sells its vendor's interest in the land contract to another individual and records the assignment without a return as the vendor's interest is a personal interest in a debt. Now the deed in satisfaction is being recorded. Does Exemption (17) apply since the land contract was exempt and the current vendor is not a governmental agency?
  3. When gifting property to a public school district, is this conveyance exempt from fee?
  4. My company has just started handling the resale of properties foreclosed by Federal Home Loan Mortgage Corporation (Freddie Mac). Is a transfer fee due when sold to a new buyer, or does exemption sec. 77.25(2), Stats, apply to the sale?
  5. Can you give some examples of other Governmental Agencies?

Gifts

  1. Is a gift of real estate to a university or college foundation that funds research and scholarships exempt from a transfer return and transfer fee under sec. 77.25(2g), Wis. Stats.?

    No, a foundation is not an instrument, agency, or subdivision of the United States or the state.

  2. If I give my nephew a house, is a transfer return and fee due?

    Yes, Even though the house was a gift, a fee is due on the full market value of the property per sec. 77.21(3)(b), Wis. Stats. Transactions between and uncle and niece or nephew are not exempt.

General Partnership

  1. Is a quit claim deed from a general partnership for a conversion to the limited liability partnership subject to a transfer fee?

    No. A general partnership registering as a limited liability partnership, is exempt under 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 conversion of a general partnership to a limited liability partnership.

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

    Yes. A conversion from a general partnership to a limited liability corporation is not permitted under sec. 178, Wis. Stats. It is a conveyance between two entities and is subject to transfer fee.

    Sec. 77.25(6m), Wis. Stats., is specific to conversions of a limited partnership under sec. 179.76, Wis. Stats.; domestic corporation under sections 180.1161 and 181.1161, Wis. Stats., and limited liability companies under sec. 183.1207, Wis. Stats., to another form of entity permitted.  Exemption (6m) only applies if, after the permitted conversion, the ownership interests in the new entity are identical with ownership interests in the original entity immediately preceding the conversion.

Government Agencies

  1. Are all sales to a governmental agency exempt from fee under sec. 77.25(12), Wis. Stats, pursuant to or in lieu of condemnation?

    No. Not all sales to a governmental agency are exempt from fee. The conveyance is exempt per Exemption (12) as "pursuant to or in lieu of condemnation" if the sale meets the criteria under sec. 32.05, or sec. 32.06 Wis. Stats. At a minimum the procedures under Chapter 32 for condemnation need to be initiated.

    The exemption does not apply when:

    • The property purchased has been on the open market for sale.
    • The property was the final selection of many parcels for a project that could have been placed anywhere. For example: a maintenance garage would not be exempt because it could be placed anywhere, as opposed to an extension of an airport runway which must be placed at the end of a runway.
  2. Is the following satisfaction of a land contract exempt per sec. 77.25(17), Stats? A city sells property to an individual on land contract and the transfer return (required since the transferor is the lender) was filed using Exemption (2). Later the city sells its vendor's interest in the land contract to another individual and records the assignment without a return as the vendor's interest is a personal interest in a debt. Now the deed in satisfaction is being recorded. Does Exemption (17) apply since the land contract was exempt and the current vendor is not a governmental agency?

    Yes. Since the original vendor was a governmental agency and exemption sec. 77.25(2), Wis. Stats., was properly used, the satisfaction is exempt per sec. 77.25(17), Wis. Stats., regardless of the current vendor.

  3. When gifting property to a public school district, is this conveyance exempt from fee?

    Yes. A gift to a public school district is exempt from the fee per sec. 77.25(2g), Wis. Stats.  Note that a gift to a private school is subject to fee per Tax 15.03(5) Wis. Adm. Code which relates to: "conveyances between an individual and a tax exempt organization.

  4. My company has just started handling the resale of properties foreclosed by Federal Home Loan Mortgage Corporation (Freddie Mac). My question is whether or not a transfer fee will be due when they sell to a new buyer, or does exemption sec. 77.25(2), Stats, apply to the sale?

    Freddie Mac is exempt from transfer fee per sec. 77.25(2), Stats. as an instrumentality of the United States based upon Rust v. Johnson, 597 F.2d 174 (9th Cir. 1979). Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae) are exempt from transfer fee.  See, sec. 77.25(2) ("From the United States or from this state or from any instrumentality, agency or subdivision of either.")  The exemption from real estate transfer fee is not by their charter under 12 USCS § 1732a(c) since they are subject to state and local real estate taxes.

  5. Can you give some examples of other Governmental Agencies?
    • Department of Housing and Urban Development, 42 USCS § 3532
    • Federal Intermediate Credit Bank, 12 USCS § 2071
    • Federal Land Bank, 12 USCS § 2011
    • Federal Land Bank Association, 12 USCS § 2031
    • Production Credit Association, 12 USCS § 2091
    • Veterans Administration, 38 USCS § 201
    • Federal Home Mortgage Corporation
    • Federal National Mortgage Association
    • Farmers Home Administration
    • Farmers Home Loan Mortgage Corporation
    • Farm Credit Banks Federal Housing Authority
    • Government National Mortgage Association (Ginny Mae)
    • Resolution Trust Corporation, 12 USCA § 1441
    • Federal Deposit Insurance Corporation

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

March 21, 2014