Real Estate Transfer Fee Common Questions

Value of Property (Subject to Transfer Fee)

  1. When gifting property to your children and grandchildren while keeping a life estate, is there a formula to calculate the value of the remainder being conveyed?
  2. Is there another table we can use that has a formula to calculate the value of property being conveyed that is the remainder of a life estate?
  3. The Real Estate Transfer Return Instructions indicate that the "real estate value transferred" can be zero "0" for exemptions (3), (10), (13) and (17). Why is no value and zero used?
  4. What is the value subject to fee on a conveyance of a vacant lot with a contract to construct a building?

Weatherization

If claiming an exclusion from the Rental Weatherization standards, refer to the list of exclusion codes within the eRETR instructions:
https://ww2.revenue.wi.gov/GenericFile/help/eRetr/detail.htm#weatherization

Further information in regards to the Weatherization Program and Exclusion Codes can be found at theDepartment of Safety and Professional Services website: http://dsps.wi.gov/sb/SB-RentalWeatherizationProgram.html#resources

  1. Is a conveyance that is exempt from transfer fee under sec. 77.25, Wis. Stats., also exempt from the Rental Weatherization standards under sec. 101.122, Wis. Stats.?
  2. If I buy a residential building to fix it up and sell, do I need to comply with the Rental Weatherization standards? The property will not be rented to anyone or occupied as a primary residence during the time of rehabilitation.
  3. Are property purchases by relocation companies subject to the Rental Weatherization standards?
  4. Do the Rental Weatherization standards apply to a property that will be torn down within two years of transfer?
  5. Are transfers due to foreclosures subject to the Rental Weatherization standards?
  6. Are transfers by probate subject to the Rental Weatherization standards?
  7. Are the Rental Weatherization standards applicable to a dwelling that I plan on allowing a family member to live in without paying rent?
  8. When is the W-4 exclusion, for dwellings not rented in the winter, applicable?

Will, Descent or Survivorship

  1. If four siblings receive real estate and other assets in equal shares pursuant to a will, does sec. 77.25(11), Wis. Stat., "By will, descent or survivorship", apply where an agreement between the heirs states one heir will receive the real estate and the remaining heirs receive other assets?
  2. A trust beneficiary receives a Trustee's Deed marked Exemption (11) with no transfer return. Does it qualify for Exemption (11), by will descent or survivorship?
  3. Is a sale pursuant to a will exempt from a transfer return and fee under state law (sec. 77.25(11), Wis. Stats.)?

Value of Property (Subject to Transfer Fee)

  1. When gifting property to your children and grandchildren while keeping a life estate, is there a formula to calculate the value of the remainder being conveyed

    Yes, the value required on the transfer return is the fair market value of the remainder being transferred. This is calculated on the fair market value of the entire property multiplied by a factor ("Expected Return Multiple") as determined on the Actuarial Tables in IRS Publication 939, General Rule for Pensions and Annuities. This publication may be found on the IRS website: http://www.irs.gov/pub/irs-pdf/p939.pdfThe value gifted to the children would be exempt from the transfer fee per sec. 77.25(8), Wis. Stats. However, the value gifted to the grandchildren would be subject to the transfer fee. On the eRETR "Fee computation" page, enter the total value of the entire property in "Total value of real estate transferred." In the "Value Subject to Fee" box, enter the value calculated using the Actuarial Tables referred to above,  of the remainder interest to be conveyed to the grandchildren. The preparer should select Exemption (8) - "Gift Parent/Children" for the balance of the total real estate value in the exemption selection box.

  2. Is there another table we can use that has a formula to calculate the value of property being conveyed that is the remainder of a life estate?

    Yes, you may use the table in the Wisconsin Department of Health and Family Services Medicaid Eligibility Handbookfound at: http://www.emhandbooks.wi.gov/meh-ebd. The value that is required on the return is the fair market value of the remainder being transferred. This is calculated on the fair market value of the entire property multiplied by the factor as determined inthe table.

  3. The Real Estate Transfer Return Instructions indicate that the "real estate value transferred" can be zero "0" for exemptions (3), (10), (13) and (17). Why no value and zero used?

    Zero (0) may be entered as the real estate value transferred for the following exemptions:

    • Sec. 77.25(3), Wis. Stats.: "Which, executed for nominal, inadequate or no consideration, confirms, corrects or reforms a conveyance previously recorded." Under exemption (3), the real property was previously conveyed on the deed now being corrected. The correction deed does not convey any fee simple interest thus the value is zero.
    • Sec. 77.25(10), Wis. Stats.: "Solely in order to provide or release security for a debt or obligation."  Such a document does not convey any real estate, but simply places or removes a lien or cloud on the title.
    • Sec. 77.25(13), Wis. Stats.: "Of real estate having a value of $100 or less." Because the tax is imposed on each $100 of value, if the real estate's fair market value  is less than $100, it is deemed to have no value and zero may be entered. You cannot use special use valuations for purposes of this exemption.
    • Sec. 77.25(17), Wis. Stats.: "Of a deed executed in fulfillment of a land contract if the proper fee was paid when the land contract or an instrument evidencing the land contract was recorded." In Wisconsin, ownership of real estate is transferred when a land contract is entered into.  If the transfer tax was paid at that time, then the deed in fulfillment of the land contract is essentially a satisfaction of the financing and is not a conveyance.
  4. What is the value subject to fee on a conveyance of a vacant lot with a contract to construct a building?

    The value subject to transfer fee is only the value of the real property at the time of conveyance. The improvement value would be included with the lot value only on that percentage of improvements completed at the time of conveyance. Examples:

    • If there is only a vacant lot with a construction contract, include value of the lot only.
    • Improvements are 50% completed – include value of lot plus 50% of the value of the improvements.
    • Improvements are100% completed – include value of lot plus total value of the improvements.

    See R & R Development Group, LLC v. Wisconsin Department of Revenue, Wisconsin Tax Appeals Commission, Docket No. 97-T-212, Decision and Order dated February 11, 1999.

Weatherization

If claiming an exclusion from the Rental Weatherization standards, refer to the list of exclusion codes within the eRETR instructions:
https://ww2.revenue.wi.gov/GenericFile/help/eRetr/detail.htm#weatherization. Further information in regards to the Weatherization Program and Exclusion Codes can be found at theDepartment of Safety and Professional Services website:
http://dsps.wi.gov/sb/SB-RentalWeatherizationProgram.html#resources  

  1. Is a conveyance that is exempt from transfer fee under sec. 77.25, Wis. Stats., also exempt from the Rental Weatherization standards under sec. 101.122, Wis. Stats.?

    Yes. Exclusion code W-3 applies if the conveyance was exempt under one of the exemptions from transfer fee under sec. 77.25, Wis. Stats.  See Wis. Admin. Code SPS sec. 367.03(1)(b)1.

  2. If I buy a residential building to fix it up and sell, do I need to comply with the Rental Weatherization standards? The property will not be rented to anyone or occupied as a primary residence during the time of rehabilitation.

    Yes, since the future use of the building is not ensured, these types of transfers are subject to the Rental Weatherization standards.  However, you may file a Stipulation to delay compliance for up to a year.  If the property is sold within that year, the buyer may take over responsibility for compliance.  If the buyer will owner-occupy within that year, they can obtain a Satisfaction of Compliance from the Department of Safety & Professional Services.

  3. Are property purchases by relocation companies subject to the Rental Weatherization standards?

    Yes. However, similar to the rehabilitation scenario above, a Stipulation may be filed, compliance may be taken over by a subsequent buyer and then satisfied by owner-occupancy within a year of the first transfer.

  4. Do the Rental Weatherization standards apply to a property that will be torn down within two years of transfer?

    Yes.  In this case, you would file a Waiver that indicates that the property will be demolished within two years of the transfer. Once the property is demolished, notify the Department of Safety & Professional Services and a Satisfaction of Compliance will be issued. The Satisfaction of Compliance  should be recorded with the Register of Deeds.

  5. Are transfers due to foreclosures subject to the Rental Weatherization standards?

    If sec. 77.25(14), Wis. Stats. as a transfers to a person holding the mortgage or to the seller under land contract applies to the conveyance they are also excluded from the Rental Weatherization standards under exclusion code W-3. (Note: If sec. 77.25(14), Wis. Stats. does NOT apply to the conveyance then they are subject to the Weatherization Standards. Any previously recorded Stipulations or Waivers related to that property will be nullified.  However, any subsequent transfer to a party without a previous interest in the property could be subject to the standards.

  6. Are transfers by probate subject to the Rental Weatherization standards?

    No, transfers as a part of the probate process, including transfers to third parties, are excluded from the Rental Weatherization standards under exclusion code W-11. Any previously recorded Stipulations or Waivers related to that property will be nullified.  However, any subsequent transfer to a party outside of probate could be subject to the standards.

  7. Are the Rental Weatherization standards applicable to a dwelling that I plan on allowing a family member to live in without paying rent?

    Yes.  The exemption for owner-occupied property is limited to the purchaser and does not extend to other family members if the purchaser does not use it as his/her primary residence. (If the occupant will have life tenancy, then it would be a W-11 excluded transfer.)

  8. When is the W-4 exclusion, for dwellings not rented in the winter, applicable?

    It is applicable to seasonal rental units, such as cottages, that are not intended to be rented during the heating season, i.e. November 1 through March 31.  It is not applicable to dwellings that may be vacant for some period of time after purchase, due to rehabilitation, flipping or relocation purposes.

Will, Descent or Survivorship

  1. If four siblings receive real estate and other assets in equal shares pursuant to a will, does sec. 77.25(11), Wis. Stat., "By will, descent or survivorship", apply where an agreement between the heirs states one heir will receive the real estate and the remaining heirs receive other assets?

    Yes,  in such case, the conveyance is by will, descent or survivorship and Exemption (11) applies. However, if the heir receiving the real estate has to pay the estate or siblings any consideration, that amount would be subject to transfer fee. This may happen when the real estate value is greater than the other assets and the payment to the estate ("boot") creates equal shares. In this case, when completing the fee computation page on the return, the total real estate value conveyed is the fair market value of the property. The total value subject to fee would be the amount paid to the estate and the preparer should select Exemption (11) for the balance of the total real estate value. Note: Normally Exemption (11) does not require a transfer return but when "boot" is paid in to the estate a transfer return is required to be submitted to the Register of Deeds.

  2. A trust beneficiary receives a Trustee's Deed marked Exemption (11) with no transfer return. Does it qualify for Exemption (11), by will descent or survivorship?

    No. The exemption pursuant to sec. 77.25(11), Wis. Stats., is only used for conveyances from an estate (deceased individual) made by will, decent or survivorship. The Trustee's Deed is exempt instead under sec. 77.25(9), Wis. Stats., "from a trustee to a beneficiary," as long as there was no consideration exchanged, and a return is required.

  3. Is a sale pursuant to a will exempt from a transfer return and fee under state law (sec. 77.25(11), Wis. Stats.)?

    No. A transfer return is required and the sale price is the value subject to transfer fee.

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 19, 2014