Real Estate Transfer Fee Common Questions

Security for a Debt

  1. Explain the purpose of Exemption (10). It is our understanding that transactions claiming Exemption (10) do not transfer a real estate ownership interest. Is this correct and, if so, should the Real Property Lister be changing the tax bill address?

Sheriff Sales

  1. Is an Electronic Real Estate Transfer Return need on Sheriff Sales?
  2. When is a transfer fee due on a Sheriff's Deed?
  3. When is a transfer fee not due on a Sheriffs' Deed?
  4. If a mortgage has been assigned, does the assignment of the mortgage have to be recorded for sec. 77.25(14), Wis. Stats., to apply?
  5. How is the transfer return completed for a Sheriff's Deed?
  6. The successful bidder at a sheriff's sale is an LLC. The only members of the LLC are the defendants, a husband and wife. They purchased their own house, but 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 pursuant to § 77.25(15s) because the Grantors are the only members of the Grantee?
  7. Does a transfer return have to be filed when an IRS Certificate of Sale of Seized Property (Form 2435) is recorded?

Short Sales

  1. How is the transfer fee calculated on a "short sale," where the amount owed on a mortgage exceeds the purchase price?

Social Security Numbers

  1. What law permits the Department of Revenue to require Social Security Numbers (SSN/FEIN) to be reported on the transfer return?
  2. When there is more than one grantor or grantee, do we have to list Social Security Numbers for each grantor and grantee?
  3. If an individual buys property and does not have a Social Security Number, what do you report on the return?
  4. If the grantor refuses to give his Social Security Number. How can we record the deed without this information?
  5. If a return is filed using all 9s for the grantor's Social Security Number, does an amended return need to be filed later if the grantor's Social Security Number is obtained?
  6. How is the Department of Revenue ensuring that the eRETR information, especially the Social Security Numbers and FEIN, are secure from identity theft?

Security for a Debt

  1. Explain the purpose of Exemption (10)? It is our understanding that transactions claiming Exemption (10) do not transfer a real estate ownership interest. Is this correct and, if so, should the Real Property Lister be changing the tax bill address?

    Exemption (10) applies to a conveyance that is made "in order to provide or release security for a debt or obligation."  Typically, these documents are in the forms of a mortgage and satisfaction of mortgage, or deeds in satisfaction of a land contract.  On occasion, a deed may be used like a mortgage but only evidence security and does not actually convey any interest in the real property.

    Example: A borrows money from B and B would like security for the loan. A signs a mortgage deed to B securing the loan, stating that the deed is for mortgage purposes. The mortgage deed is recorded and the transfer return claims Exemption (10). B's interest in the property is only as security for a loan. The mortgage deed does not give B any fee simple interest in the property.  Once the loan is paid off, B can also deed the property back to A claiming Exemption (10), since B is releasing security for a debt. Since there is no conveyance of a fee simple interest in such a situation where Exemption (10) is claimed, the Real Property Lister should not change the tax bill address  unless "Tax Bill Mailing Address" on the eRETR is filled in.

Sheriff Sales

  1. Is an Electronic Real Estate Transfer Return needed on Sheriff Sales?

    Yes. An electronic Real Estate Transfer Return is due for all Sheriff's Deeds, even if the deed may be exempt from transfer fee.

  2. 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 has assigned 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 amount of the successful bid and is to be paid out of the proceeds on the sale in the same manner as all other expenses are paid, per sec. 846.16, Wis. Stats. The statute further requires that the Sheriff shall file a completed transfer return, a transfer fee (if due), and the Sheriff's Deed with the Clerk of Court, who shall then transmit all of the foregoing to the Register of Deeds.

    The Sheriff is acting as trustee/fiduciary for the debtor and is responsible to ensure that these expenses are properly satisfied. The Department will send any additional transfer fee assessments to the Sheriff to collect when exemption (14)  is claimed improperly.

  3. When is a transfer fee not due on a Sheriff's Deed?

    The exemption provided by 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."  Only the mortgage holder or the holder of the vendor's interest in a land contract may be the grantee under the Sheriff's Deed in order to qualify for the exemption.

  4. If a mortgage has been assigned, does the assignment of the mortgage have to be recorded for sec. 77.25(14), Wis. Stats.,  to apply?
    • Generally, yes. The assignment does not need to be recorded to qualify for the exemption if the assignee is one of the following:
    • An insurer such as HUD, Fannie Mae, Freddie Mac, VA, etc.
    • Another lender who actually holds the mortgage, if plaintiff was acting as servicing agent.
    • A subsidiary of the lender due to regulations that prohibit lender from holding assets.

    Note: This is a new position the Department is taking 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 Tax.15.03, Wis. Adm. Code.

  5. How is the transfer return completed for a Sheriff's Deed?

    The proper name for Grantor is the debtor's (title holder's) name and, likewise, his/her Social Security Number. If the debtor's Social Security Number and address cannot be obtained after a reasonable search, all 9's may be put on the return. The Sheriff is acting as trustee/fiduciary for the debtor and does not have title to the property. Therefore, the Sheriff is not the grantor and the exemption per sec. 77.25(2), Wis. Stats., cannot be used. The Sheriff's name, address and telephone number must be placed in as grantor's agent. The remaining parts of the return are to be completed in the same manner as with any other conveyance.

  6. The successful bidder at a sheriff's sale  is an LLC. The only members of the LLC are the defendants, a husband and wife. They purchased their own house, but 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 pursuant to § 77.25(15s) because the Grantors are the only members of the Grantee?

    No. The conveyance is not exempt per 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 that requirement. Nor does sec. 77.25(14), Wis. Stats., apply since the LLC would be considered a "third party." However; it would be exempt under the "2 step" method if the individuals were to be the successful bidders and take title using Exemption (14) and then convey into their LLC using Exemption (15s).

  7. Does a transfer return have 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 has been done to redeem the property, the IRS will give 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 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.

Short Sales

  1. How is the transfer fee calculated on a "short sale," where the amount owed on a mortgage exceeds the purchase price?

    The transfer fee is calculated on what is paid (cash or equivalent) plus any liens, including any back taxes. Section 77.21(3)(a), Wis. Stats., states that "In the case of any conveyance not a gift, the amount of the full actual consideration paid therefor or to be paid, including the amount of any lien or liens thereon."

    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 life of the loan) and the new "short sale" is for $135,000. The fee is on $135,000 as the sale price to the new owner. Any "short"  that the former owner owes to the bank is excluded in computing the transfer fee.

Social Security Numbers

  1. What law permits the Department of Revenue to require Social Security Numbers (SSN/FEIN) to be reported on the transfer return?

    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."

  2. When there is more than one grantor or grantee, do we have to list Social Security Numbers for each grantor and grantee?

    Yes. Include Social Security Numbers and address (if each is different) for each of the grantors and grantees. The only exception is for a husband and wife with the same last name, if both first names are included in the same box, in which case only one Social Security Number is necessary.

  3. If an individual buys property and does not have a Social Security Number, what do you report on the return?

    The Wisconsin Electronic Real Estate Transfer Return requires a taxpayer identification number to be furnished. When an individual does not have a Social Security Number or an Individual Taxpayer Identification Number (ITIN) and legally is not required to have one, simply fill the box in with all 9s.

    To determine whether or not an individual requires a SSN or ITIN, consult the U.S. Tax Guide for Aliens, Publication 519.

  4. The grantor refuses to give his Social Security Number. How can we record the deed without this information?

    In instances where the grantor refuses to give his/her Social Security Number, complete the boxes with all 9s.

  5. If a return is filed using all 9s for the grantor's Social Security Number, does an amended return need to be filed later if the grantor's Social Security Number is obtained?

    Yes. File an amended return and provide the Social Security Number. 

  6. How is the Department of Revenue ensuring that the eRETR information, especially the Social Security Numbers and FEIN, are secure from identity theft?

    The eRETR is confidential per sec. 77.265, Wis. Stats. The Department of Revenue restricts access to the eRETR and the information on it. When the eRETR is used, the Social Security Numbers will only appear in the saved file on the preparer's computer and on the printed summary section. If the summary is printed to take to closing for the parties, any copies to be handed out should have the Social Security Numbers redacted. Once the eRETR is submitted to the Department, the Social Security Number is moved to a different server from which only Revenue employees can access the data. Local government officials and other state agencies do not have access to the servers with the Social Security Numbers.

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 March 21, 2014