Revision: June 2, 2016, midnight
\t \t\tHB 1656-FN - VERSION ADOPTED BY BOTH BODIES
05/05/2016 1466s
05/05/2016 1637s
1June2016... 2019CofC
2016 SESSION
\t16-2461
\t09/10
HOUSE BILL\t1656-FN
AN ACT\trelative to exceptions to the real estate transfer tax.
SPONSORS:\tRep. D. McGuire, Merr. 21; Rep. Lovejoy, Rock. 36; Rep. Abrami, Rock. 19; Sen. Sanborn, Dist 9
COMMITTEE:\tWays and Means
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AMENDED ANALYSIS
\tThis bill establishes exceptions from the real estate transfer tax for certain transfers of title related to changes in form of organization or made between the owners and the entity for no consideration.
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Explanation:\tMatter added to current law appears in bold italics.
\t\tMatter removed from current law appears [in brackets and struckthrough.]
\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.
05/05/2016 1466s
05/05/2016 1637s
1June2016... 2019CofC\t16-2461
\t09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Sixteen
AN ACT\trelative to exceptions to the real estate transfer tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
\t1 Purpose. The purpose of RSA 78-B:2, XXII as inserted by this act is to clarify existing law.
\t2 New Paragraphs; Exceptions to Real Estate Transfer Tax. Amend RSA 78-B:2 by inserting after paragraph XX the following new paragraphs:
\t\tXXI.(a) To a transfer of title provided that:
\t\t\t\t(1) The transfer of title, where no consideration is exchanged, is coincidental to a change in the transferor's form of organization to that of the transferee;
\t\t\t\t(2) As a result of the change in the transferor's form of organization, the assets and liabilities of the transferor immediately preceding the change in form of organization and the assets and liabilities of the transferee immediately following the change in form of organization are the same; and
\t\t\t\t(3) At the time of the transfer of title, the owner or owners of the transferor and the owner or owners of the transferee, and the respective ownership percentages of each, are identical.
\t\t\t(b) For the purpose of this paragraph, a beneficial interest in a trust shall be considered an ownership interest in such trust.
\t\tXXII. To a transfer of title from the owners of an entity to the entity, or from the entity to the owners of the entity; provided that:
\t\t\t(a) No consideration is exchanged for the transfer of the real estate; and
\t\t\t(b) The direct or indirect owners of the parties to the transfer remain the same before and after the transfer of the real estate, the respective ownership percentages of each are identical, and the combined assets and liabilities of the transferor and transferee remain the same except with respect to the real estate.
\t3 Real Estate Transfer Tax; Definition; Price or Consideration. Amend RSA 78-B:1-a, IV to read as follows:
\t\tIV. "Price or consideration'', in a contractual transfer, means the amount of money, or other property and services, or property or services valued in money which is given in exchange for real estate, and measured at a time immediately after the transfer of the real estate. The value of such consideration in contractual transfers where the property exchanged includes the surrender of rights or choses-in-action by the transferee, including the surrender of shareholder or beneficial interest holder rights in liquidation of a corporation or other entity, the forgiveness of an obligation owed to the transferee, or the assumption of an obligation by the transferee, shall be no less than the fair market value of the real estate or interest in such real estate as determined by the department pursuant to RSA 78-B:9, III; except that in the case of a deed given in lieu of a foreclosure, the value of such consideration shall be the amount by which the debt of the obligor secured by the real estate or interest in the real estate is reduced plus the amount of such debt which is assumed by the transferee in exchange for the real estate, if any. Transfers made solely to obtain financing or refinancing, as required by a lending institution, and that accomplish no other business purposes shall not be considered sufficient consideration to make a transfer a contractual transfer. The recitation of nominal consideration of $10 or other valuable consideration for purposes of satisfying the statute of frauds is not consideration for purposes of this chapter.
\t4 Applicability. This act shall apply to transfers occurring on and after the effective date of this act.
\t5 Effective Date. This act shall take effect upon its passage.
\t\t\t\t\t\t\t\t\t\t\t16-2461
\t\t\t\t\t\t\t\t\t\t\tAmended 5/13/16
HB 1656-FN- FISCAL NOTE
AN ACT\trelative to exceptions to the real estate transfer tax.
FISCAL IMPACT:
The Department of Revenue Administration states this bill, as amended by the Senate (Amendments #2016-1637s and #2016-1466s), will decrease state revenue and county revenue by an indeterminable amount in FY 2017 and each year thereafter. There is no impact on local revenue or state, county and local expenditures.
METHODOLOGY:
The Department of Revenue Administration states this bill exempts from the real estate transfer tax certain real estate transfers from an entity to another entity. Specifically, the exemptions would apply (1) if the transfer is coincidental to a change in the transferor's form of organization; (2) if the assets and liabilities of the transferor become the assets and liabilities of the transferee; or, (3) if the owner(s) of the transferor and the owner(s) of the transferee are the same with identical ownership percentages. The bill also includes an exemption from the tax for transfers from the owners of the entity to the entity or from the entity to its owners when (1) no consideration is exchanged and (2) the owners and their respective ownership percentages remain the same. Lastly, the bill alters the definition of "price or consideration" by adding that transfers made solely to obtain financing or refinancing shall be exempt. The Department states these exemptions will result in a decrease in real estate transfer tax revenue to the state and counties. The register of deeds in each county receives 4 percent of the face value of real estate transfer tax stamps issued at the registry. Determining the impact on revenue is further complicated as some number of real estate transactions made exempt by the proposed bill would have already been exempt under administrative rules (NH Admin. Rules Rev 800), such as the rule governing single entity reorganizations and the rule governing LLC conversions.
The Department states it can administer the provisions of this bill with no increase in expenditures.