Philly Realty Transfer Tax (x2) when buying from a wholesaler?

[Mauricio Botero]

As we already know when you buy and sell property in Philadelphia, there is a transfer tax you have to pay that comes out to about 4.2% of the purchase price of the property. https://beta.phila.gov/services/payments-assistanc...

What I'm wondering from the Philly group here is what your experiences have been with using wholesalers and assignment of contracts of sale, and how that worked with the transfer tax. I've read the bulletins and guidance that with assignments, that is considered a transaction that triggers the transfer tax being due (again). But also read some guidance that says you wont have to pay it twice if the assignment ends up being with your LLC as the buyer and you go to closing and you in fact are that LLC on the assignment contract.

So basically, wanted to start a thread not just for me but for others in the group if you run into this, what has been your experiences with transfer tax in Philly when it comes to this? Have you had to pay the transfer tax more then once as a buyer when buying from a wholesaler? Do you have any good links you can share that explains this better? Here are some links that I have that helped me with my research:

• http://www.revenue.pa.gov/GeneralTaxInformation/TaxLawPoliciesBulletinsNotices/TaxBulletins/RTT/Documents/rtt_bulletin_2008-01.pdf

• https://www.foxrothschild.com/publications/update-realty-transfer-tax-on-assignments-of-agreements-of-sale/

• https://www.ballardspahr.com/alertspublications/legalalerts/2008-04-29_pennsylvaniarealtytransfertax.aspx

• https://www.pabulletin.com/secure/data/vol37/37-50/2306a.html

[Steve Babiak]

Originally posted by @Yuriy Skripnichenko:

@Mauricio Botero

I've done a few assignments of the properties that I purchased. Never heard this before. You pay transfer tax only when you are transferring property (changing ownership). Even if you are transferring property from your name to your company (or between your companies) or vise vera you still pay transfer tax.  However, assignment of the agreement of sale has nothing to do with actual sale and transferring of ownership. And you should not pay transfer tax at assignment no matter who is transferring (LLC or a person).  You should ask this questing your title company. 

Unfortunately, the PA Department of Revenue does not take the position that you posted; the PA Department of Revenue has published their position as given in the OP.

Now, it could be that the title company you used to close with the assignment decided to ignore the PA Department of Revenue's rules to collect that extra transfer tax. But they do audit closings to see if the correct transfer taxes are being paid, and when they audit they ask the buyer, seller and title company to explain the transaction, even requesting a copy of the agreement(s). Sort of like running a traffic light changing from yellow to red  - OK as long as nobody catches you doing it.