Pennsylvania - Rentals, LLC and Transfer Tax Question

[Jonathan C.]

Originally posted this in General Real Estate Investing but I think it probably belongs here instead.

What is the best method we should use to buy a property and put it into a newly formed LLC?

Our LLC currently does not have a property, but when we buy one we want it to be in the name of the LLC. It looks like from what I have read that a Quit Claim Deeds is the best way. As we are based in Pennsylvania, I'm aware that there is a 2% title transfer tax, would that affect a Quit Claim deed? Would we need to deal with it twice, once when purchased from seller, and again to transfer to LLC? Is there an exemption or some way around this?

Completely new to this. Thanks for the help.

[Steve Babiak]

Originally posted by Marc Shaw:

The Transfer Tax in PA is 4%. But when it is a quit claim deed for a dollar instead of actual consideration like you are suggesting, it is based on the Tax Assessed Value multiplied by the common level ratio of the county you are working in. Then the outcome multiplied by the 4%.

The RTT in PA varies. In Philadelphia it is 4% as mentioned in the quote; in other parts it is as low as 2% as mentioned by the OP (Montgomery County for the most part is 2%, but I believe that some parts of that county may have a higher rate). Here is a link with some explanation as to why this varies:
http://www.parealtor.org/content/Archive_TransferTax.htm

here is the state's website with details on RTT:
http://www.portal.state.pa.us/portal/server.pt/community/realty_transfer_tax/14710