New Real Estate Laws Affecting Titling of Properties

I have had many small business owners come to me seeking advice on how to transfer title to property owned in their individual name into a limited liability company. Current law in Maryland and the District of Columbia already allows partners in a general partnership to transfer property held in their individual names to a limited liability company in which they are the sole members, tax-free. However, currently in those two jurisdictions, the same exemption does not apply when a sole proprietor seeks to transfer title to her property in the name of her limited liability company without incurring transfer and recordation taxes of nearly 3% of the property’s assessed value. This tax can be an unbearable cost for a small business owner. If the small business owner does not want to pay the tax by retaining the property in her own name, then she remains at risk of personal liability.

Here at Weiss LLP, we recognize that such a conundrum is unacceptable, which is why we have spent countless hours working with the Maryland and District of Columbia legislative bodies to effect change. Maryland House Bill 363 and Senate Bill 111 exempt transfers of real estate from transfer and recordation taxes when the subject property is transferred by sole proprietors to their limited liability company. The exemption covers property of up to $1 million in value. The exemption, once signed into law, will take effect in Maryland on July 1, 2017.

We are currently working with the District of Columbia City Council on drafting a similar exemption. In so doing, we have already obtained support from a number of councilmembers and lobbying groups.

If you are a business owner and need advice or help in business planning matters please contact me, Randy Alan Weiss, at 202-296-2121.

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