Pennsylvania Code › Title 61 - REVENUE › Part I - Department of Revenue › Subpart B - General Fund Revenues › Article IV - County Collections › Chapter 91 - REALTY TRANSFER TAX › Subchapter G - VALUATION › Section 91.132 - Bona fide sale transactions

Current through Register Vol. 54, No. 28, July 13, 2024
(a) In a
						bona fide sale of real estate, the value of the real estate is the total agreed
						consideration for the sale which is paid or to be paid.
(b) The value includes liens existing before
						the transfer and not removed thereby-whether or not the underlying indebtedness
						is assumed-or a commensurate part of the liens, if they also encumber other
						real estate.
Example 1
(existing mortgage
						  lien):
S conveyed a parcel to P in a bona fide sale. The
						  agreed cash consideration was $20,000. P also agreed to assume S's mortgage on
						  the parcel which had a remaining balance due of $10,000. The value of the
						  realty conveyed to P is $20,000 plus $10,000 or a total of $30,000, because the
						  existing mortgage lien was not removed by the transfer.
Example 2
(a lien encumbers both the
						  transferred realty and other realty):
S owns two lots, both of which are encumbered by a
						  single $10,000 lien. The assessed value of the lots are $4,000 and $6,000. S
						  sells the lot assessed at $4,000 to B for $20,000 in a bona fide sale. If the
						  lien is removed by the sale, the total consideration for the sale is $20,000.
						  If the lien is not removed by the sale the total consideration is $24,000 which
						  is computed as follows:
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(c) The
						value for which a seller will be liable for the payment of tax does not include
						the value of consideration paid by a buyer's assignee, or a subsequent assignee
						thereof, for the right to have the seller convey the real estate to the
						assignee or subsequent assignee unless the seller or the seller's affiliate is
						a party to the assignment and receives part or all of the consideration paid
						for the assignment. If the seller or the seller's affiliate is a party to the
						assignment and receives part or all of the consideration paid for the
						assignment, the value shall include the value of the consideration that the
						seller and its affiliate receives. For purposes of this section, the term
						"seller's affiliate" has the same meaning as the term grantor's affiliate in
						§
												91.131 (relating to definitions).
Example 1
. X enters into an agreement
						  of sale with Y for the conveyance of real estate for $100,000. Y subsequently
						  assigns the sales agreement to Z for $1 million. X executes a deed for the
						  conveyance of the real estate to Z and receives $100,000. Y receives $1 million
						  from Z for the assignment. The taxable value of the deed from X to Z for which
						  X is liable is $100,000.
Example 2
. X enters into an agreement
						  of sale with Y for the conveyance of real estate for $100,000, plus 20% of the
						  value of any consideration that Y receives for an assignment of the agreement
						  of sale. Y subsequently assigns the sales agreement to Z for $1 million. X
						  executes a deed for the conveyance of the real estate to Z and receives
						  $100,000, plus 20% of the assignment price of $1 million ($200,000). The
						  taxable value of the deed from X to Z for which X is liable is $300,000.
Example 3
. X enters into an agreement
						  of sale with Y, X's wholly-owned entity, for the conveyance of real estate for
						  $100,000. Y subsequently assigns the sales agreement to Z for $500,000. X
						  executes a deed for the conveyance of the real estate to Z. X receives $100,000
						  from Y and Y receives $500,000 from Z for the conveyance. The taxable value of
						  the deed from X to Z for which X is liable is $600,000.
The provisions of this §
														91.132 issued under section 1107-C
							 of the Tax Reform Code of 1971 (72 P. S. §
															8107-C).