Real Estate Transfer Fee Common Questions

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, they need to 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? If the parcel numbers are wrong or incomplete, can the property lister add/delete once the property lister gets the form?
  3. My neighbor and I had a new survey done and we need to record a deed that corrects 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 son and daughter-in-law. Is there a transfer fee due on this amount?
  2. If parents gift their home to son and daughter-in-law, is this exemption under 77.25(8), Wis. Stats?
  3. My father this giving my husband and I a home value at $121,000. We will be 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 1/3 each on three properties. One son is deeding his 1/3 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 the transfer fee?

Partition

  1. Two individuals own a piece of land that has now been split into two parcels. The individuals now own 2 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. 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 6 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 is to receive property 1, sibling B is to receive property 2, and sibling C is to get property 3.

Partnerships

  1. If a general partnership converts to a limited liability company, would the transaction be exempt from transfer fee per sec. 77.25(6m), Stats?
  2. A parcel of land is owned by a partnership comprised of a father and son. Pursuant to a divorce judgment, the father must convey his half interest in the property to his wife. A deed is prepared that transfers the property from the partnership to the wife and son. Is the transfer from the partnership exempt from transfer fee by Exemption (8m) or (15m)?
  3. What are some examples of required relationships for Exemption (15) for corporations, (15m) for partnerships and, (15s) for limited liability companies?
  4. Would the transfer of real estate from a partnership to partners who are not related be subject to a transfer fee?

Penalties

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

Personal Property

  1. A parcel of real estate 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 Tax 15.03(5), Wis. Adm. Code. The fee would be based upon the fair market value of the property 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 3 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. The 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, they need to 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? If the parcel numbers are wrong or incomplete, can the property lister add/delete once the property lister gets the form?

    No. All grantors, grantees and parcels (with exception noted below) MUST be on the Receipt. Leaving off any of those is grounds for rejection of the recording by the Register of Deeds.

    The criteria for an Electronic Real Estate Transfer Return (eRETR) state:

    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 here or listed under the "Short legal description". 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.

    eRETR criteria: http://www.revenue.wi.gov/pubs/slf/pe100e.html

    It is correct that parcel numbers can be edited by the property lister for accuracy. However, it is very important that the receipt "mirrors" the document for grantors, grantees and parcels. We cannot expect the property lister or the Department of Revenue to complete the transfer return by adding parcels when it is the responsibility of the filer to have a complete return. The eRETR business rules insure all required items are completed. The only thing the eRETR cannot do is check that all grantors, grantees and parcels are included.

  3. My neighbor and I had a new survey done and we need to record a deed that corrects 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 either:

    • Correct the previously recorded legal description, which is exempt from fee under state law (sec. 77.25(3), Wis. Stats.), or
    • 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 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 son and daughter-in-law, is this exempt under sec. 77.25(8), Wis. Stats.?

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

    Note: If there is any kind of mortgage attached to the property at the time of the conveyance, 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 will be 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 financing and assumption of the remaining mortgage is involved, the requirement of "no consideration" is not met. Accordingly, the transfer fee is imposed on the $77,000.00, and Exemption (8) would apply to the equity of $44,000.00 as a gift.

    Complete the eRETR as follows:

    • Transfer type: Check "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 1/3 each on three properties. One son is deeding his 1/3 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 the transfer fee?
    • There is no exemption for a conveyance between brothers, so fair market value ($300,000) is used in determining 1/2 of 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)
    • The equity conveyed by child to parent is covered by exemption 8
    • The value subject to fee in this case would be 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 has now been split into two parcels. The individuals now own 2 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 will meet the requirements of the exemption in sec. 77.25(5) Wis. Stats., for deeds of partition. The value of each parcel to be conveyed should be indicated on the transfer return as ½ of the total value of the lot, since each party is conveying his/her ½ 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 value of real estate conveyed.  Report $0 value as being subject to transfer fee, and claim Exemption (5).

  2. 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 ¾ of the total value of the other 3 lots they are conveying their ¼ interest in to the one receiving the lot.

    Example: Assume the same facts as in the question above. 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 value of real estate 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 6 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 will be due if the total values of the interests each LLC receives are the same. Transfer fees will be 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 6 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 they would thus be 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 will 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 is to receive property 1, sibling B is to receive property 2, and sibling C is to get 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 Sibling 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: Sibling 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)
    Sibling B
    $80,000 $ 0.00 $10,000
    Sibling C
    $80,000 $60,000 $10,000
    Total FMV
    $240,000 $60,000 $0

    In 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 has conveyed an interest in value of $20,000. The fee due on the value of $20,000 would be allocated on the transfer returns for the deeds to Properties 2 and 3, where sibling A is the grantor. Siblings B and C have gained an interest over all; therefore, they have not "conveyed" a value in the real property and would not be subject to transfer fee per sec. 77.25(5), Wis. Stats.

    Complete the transfer returns as follows:

    Completing the return for the deed of property 1 from B and C to Sibling A:

    • Type of Transfer: Check box"Other" and explain "partition".
    • Total value of Real Estatetransferred: $40,000
    • Transfer Fee: $0.00
    • Exemption: (5)

    Completing the return for the deed of property 2 from A and C to Sibling B:

    • Type of Transfer: Check box "Other" and explain "partition".
    • Total value of Real Estate transferred: $60,000
    • Transfer Fee: $30.00 (payable by A for $10,000, being one-half the $20,000 value differential)
    • Exemption: (5) applies to B and C as they have no gain or loss in value

    Completing the return for the deed of property 3 from A and B to Sibling C:

    • Type of Transfer: Check box "Other" and provide the explanation "partition".
    • Total Value of Real Estate transferred: $60,000
    • Transfer Fee: $30.00 (payable by A for $10,000, being one-half the $20,000 value differential)
    • Exemption: (5) (applies to B and C as they have no gain or loss in value)

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

Partnerships

  1. If a general partnership converts to a limited liability company, would the transaction and be exempt from transfer fee per sec. 77.25(6m), Stats?

    No. The exemption for conversions of general partnerships only applies to conversion to a limited liability partnership under sec. 77.25(6d), Wis. Stats., which is limited to "partnerships registering as limited liability partnerships under sec. 178.40." General partnerships converting to any other kind of entity do not qualify for the exemption under sec. 77.25(6m), Wis. Stats.

    Exemption (6m) applies only to a conveyance pursuant to the conversion of a business entity to another form of business entity under secs. 179.76, 180.1161, 181.1161, or 183.1207, Wis. Stats:.

    • Sec. 179.76(1), Wis. Stats. 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 that governs the organization of the business entity into which the domestic limited partnership is converting.
    • Sec. 180.1161(1)(a), Wis. Stats. 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 that governs the organization of the business entity into which the domestic corporation is converting.
    • Sec. 181.1161(1)(a), Wis. Stats. A domestic (non-stock) 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 that governs the organization of the business entity into which the domestic corporation is converting.
    • Sec. 183.1207(1)(a), Wis. Stats. 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 that governs the organization of the business entity into which the domestic limited liability company is converting.

    None of these conversion provisions applies to general partnership converting to another form of ownership.

    In all cases, the exemption in sec. 77.25(6m), Wis. Stats. will only apply if, after the conversion, the ownership interests in the new entity are identical with the ownership interests in the original entity immediately preceding the conversion.

  2. A parcel of land is owned by a partnership comprised of a father and son. Pursuant to a divorce judgment, the father must convey his half interest in the property to his wife. A deed is prepared that transfers the property from the partnership to the wife and son. Is the transfer from the partnership exempt from transfer fee by Exemption (8m) or (15m)?

    No. The conveyance from the partnership would not be exempt by either exemption and would be subject to a fee. The father and son own a partnership interest and not the real property and the wife is not a partner. Exemption (8m) is for conveyances of real property between spouses, while Exemption (15m) is between a partnership and its partners. The transaction may be exempt from fee by using two deeds where the partnership first conveys the property to the father and son using Exemption (15m) and the next conveyance from the father, his one half interest to the wife using Exemption (8m).

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

    All exemptions under sec. 77.25(15), (15m) and (15s), Wis. Stats. require that the transfer 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 would qualify for the exemption include as the following:

    • Sole ownership: Sole individual
    • Spouses: Husband and wife
    • Lineal: Parent(s) and child(ren), parent(s) and son-in-law/daughter-in-law, grandparent(s), and grandchild(ren), parents and adopted children, but not foster parents and foster children.
    • Siblings: Brother(s) and sister(s)
    • Spouses of Siblings: Brother(s) and sister(s)-in-law/Brother(s) and Brother(s)-in-law Sister(s) and Sister(s)-in-law/Sister(s) and Brother(s)-in-law Brother(s)-in-law and Sister(s)-in-law or Brother(s)-in-law
    • Any combination of the above relationships would qualify.
    • Uncles, aunts, nieces and nephews do not meet the relationship requirements.

    The exemptions apply whether or not the conveyance is to or from the entity.

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

    Note:

    Conveyances from a corporation have an additional requirement that the property must have been owned by the corporation for three or more years.  If the property has been owned by the corporation for only 18 months, then the transfer from the corporation to the shareholders would not qualify for the exemption under sec. 77.25(15), Wis. Stats.

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

    Yes. The only possible exemption for a conveyance between a partnership and the partners is the exemption contained in 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 an amount of transfer fee due is understated or an improper exemption is taken, can the Department assess a penalty? Can the penalty be waived?

    A penalty is imposed under 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."

    The imposition of the penalty was upheld in the April 15, 1996 decision of Heritage Place Limited Partnership vs. Wisconsin Department of Revenue, Waukesha County Circuit Court, Case No. 95-CV-2292.

    The penalty cannot be waived. The Department does not have discretion under sec.77.26 (8) Wis. Stats, to waive the penalty if there is an improper claim for an exemption. The statute uses the word "shall," and in statutory interpretation the use of the word "shall" generally creates a mandatory duty.

Personal Property

  1. A parcel of real estate 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, it will not be exempt from the transfer fee, regardless of the property tax treatment. Fixtures for transfer fee purposes are defined as real property per sec. 77.21(1m), Wis. Stats., and are included in the total value of the real estate transferred. The value of such items would be shown on the eRETR Fee Computation section, in the box "Value of Property Exempt from Local Property Tax INCLUDED on Total Value of REAL ESTATE Transferred."

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

    • Is the article physically attached to the premises?
    • Generally, if the item is so attached that it cannot be removed without causing substantial damage to the remaining realty, it is usually 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 usually considered a fixture. The item in question has less value if removed and taken somewhere else.
    • Is the item something that is normally intended to be made 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:

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

Page last updated June 3, 2014