Sub2 And Illinois Transfer Tax Ever Resolved?
Hi all,
A few months ago there was debate over whether a change in the law meant transfer tax would have to be paid on sub2's. I believe the issue was whether it was for the sales price or solely for the equity transferred to the buyer.
Has anyone tested this yet? Particularly in cook county?
As I read the change, it mostly seems to apply to either ground leases of 30 + years and transfers of "controlling interest" in real estate. I take that to mean when some kind of trust is involved.
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If you received a deed from your seller and went to record it, along with the PTAX-203 (transfer tax) form, you'd check next to "Warranty Deed" or "QuitClaim Deed" in Step 1, Line 5 (where the law change requires you to enter in "Other" and either "Ground lease" or "controlling interest"
As I read the instructions, on a subject to purchase, you can list the purchase price, less line 15: the amt of mortgage taken subject to. This means you pay tax on the equity you bought, not the entire purchase price.
Be careful: note the asterisk next to line 15, which points to the instruction that the deed or mortgage has to state that the property remains subject to an existing mortgage at the time of transfer.
One sub2-er in IL recorded their deed and paid tax with this form and it sailed through--they never asked that the deed mention the subject to part. My county recorder (McHenry) SPECIFICALLY mentioned it to me on the phone that I should make sure the deed has the subject to language in it. This shouldn't be an issue: I saw some deeds that listed other Subject To items (back taxes, etc.), so I'm going to just add a line to the deed near the Legal Description part.
Reminder: not professional legal advice--seek professional counsel, etc.
Andy
In Iowa we must fill out a declaration of value which must include the total price paid for the property, including any mortgages taken sub2.
This amount is the basis to pay transfer tax. The tax is cheap so I haven't ever worried.
Thanks, guys.
I'm gong to file my deed and try to pay taxes on solely the equity. Let you know how it goes.