(1)
Federal rules and
regulations. In factual situations not covered by these rules and
involving those portions of Iowa law which are consistent with the former
federal statutes (
26 U.S.C.A. 4361) that imposed a real estate transfer tax,
the department of revenue and county recorders shall follow the federal rules
and regulations in administering the provisions of Iowa Code chapter 428A.
(1968 O.A.G. 643)
(2)
Transfer of realty to a corporation or partnership. Capital
stock, partnership shares and debt securities received in exchange for real
property constitutes consideration which is subject to the real estate transfer
tax. Where the value of the capital stock is definite or may be definitely
determined in a dollar amount, the specific dollar amount is subject to the
tax. Where the value of the capital stock is not definitely measurable in a
dollar amount, the tax imposed is to be calculated on the fair market value of
the realty transferred. For purposes of this rule, fair market value shall be
as defined in Iowa Code section
441.21. (1976 O.A.G. 776)
Real estate transfer tax is not due when real property is
conveyed to a family corporation, partnership, limited partnership, limited
liability partnership, or limited liability company as defined in Iowa Code
section 428A.2 in an incorporation or
organization action where the only consideration is the issuance of capital
stock, partnership shares, or debt securities of the corporation, partnership,
limited partnership, limited liability partnership, or limited liability
company. Actual consideration other than these shares or debt securities is
subject to real estate transfer tax.
(3)
Trades of real estate.
Real estate transfers involving the exchange of one piece of real property for
another are transfers subject to the real estate transfer tax. Each grantor of
the real estate is liable for the tax based on the fair market value of the
property received in the trade as well as other consideration including but not
limited to cash and assumption of debt. (1972 O.A.G. 654)
For purposes of this rule, fair market value shall be as
defined in Iowa Code section
441.21.
(4)
Conveyance to the United States
government or the state of Iowa. Any conveyance of real estate to the
United States or any agency or instrumentality thereof or to the state of Iowa
or any agency, instrumentality, or political subdivision thereof not exempt
from the real estate transfer tax pursuant to Iowa Code section
428A.2, is subject to the real
estate transfer tax. (1968 O.A.G. 579) An exception to this rule is any
conveyance to the United States Department of Agriculture, Farmers Home
Administration, which is specifically exempted by federal law (
7 U.S.C.S.
ยง1984).
(5)
Conveyance
of property on leased land. The transfer of buildings or other
structures located on leased land is subject to the real estate transfer tax.
The fact that the person who owns a building or other structure does not own
the land upon which the property is located does not exempt this type of
conveyance from the real estate transfer tax. (1972 O.A.G. 318)
(6)
Mortgage default. In the
factual situation where a defaulting mortgagor issues a deed or other
conveyance instrument to the mortgagee as satisfaction of the mortgage debt,
the transaction is subject to the real estate transfer tax. The consideration
upon which the tax is calculated is the outstanding unsatisfied mortgage debt.
However, as an exception to this rule, a conveyance of real
property to lienholders in lieu of forfeiture or foreclosure action is exempt
from real estate transfer tax.
(7)
Completion of contract.
A deed or other conveyance instrument given at the time of completion of a
single real estate contract is subject to the real estate transfer tax. The tax
is to be computed on the full amount of the purchase price as stated in the
contract and not solely on the last installment payment made prior to the
issuance of the deed or other conveyance instrument. If the original contract
is assigned to a third party or parties prior to fulfillment of such contract,
the tax is to be computed only on the original contract price upon completion
of the contract.
When a single deed or other conveyance instrument is given at
the time of completion of multiple successive real estate contracts, separate
taxes are to be computed and paid based upon the full purchase price stated in
each contract. For example, if A sells real estate to B on an installment
contract, and then B sells the same property to C on another installment
contract, and subsequently both A and B transfer their respective interests in
the property to C via one deed, A is liable for a tax computed on the full
purchase price stated in the original contract to which A was a party and B is
liable for a tax computed on the full purchase price stated in the subsequent
contract to which B was a party.
(8)
Assignments of contract.
Assignments of real estate contracts by contract sellers and contract buyers
are not subject to the real estate transfer tax. (1970 O.A.G. 605)
(9)
Corporate and partnership
dissolution. A conveyance of realty by a corporation or partnership in
liquidation or in dissolution to its shareholders or partners subject to the
debts of the corporation or partnership is a conveyance subject to the real
estate transfer tax. However, if there are no debts and the conveyance is made
solely for the cancellation and retirement of the capital stock or dissolution,
the tax does not apply.
Real estate transfer tax is not due when real property is
conveyed from a family corporation, partnership, limited partnership, limited
liability partnership, or limited liability company as defined in Iowa Code
section 428A.2 to its shareholders,
partners, or members in a dissolution action where the only consideration is
capital stock, partnership shares, or debt securities of the corporation,
partnership, limited partnership, limited liability partnership, or limited
liability company, including the assumption of debts by the shareholders,
partners, or members. Actual consideration other than these shares or debt
securities is subject to the real estate transfer tax.
(10)
Security instruments.
Any deed or instrument given exclusively to secure a loan or debt is not
subject to the real estate transfer tax.
(11)
Marriage dissolution
exemption. Marriage dissolution exemption from the real estate
transfer tax provided in Iowa Code section
428A.2(16)
applies only to real property conveyances between former spouses specifically
mandated by a dissolution decree.
(12)
Family debt cancellation
exemption. The family debt cancellation exemption from the real estate
transfer tax provided in Iowa Code section
428A.2(11)
applies only to real estate conveyances between husband and wife, or parent and
child and indebtedness between these parties.
The amount of indebtedness subject to exemption shall not
exceed the fair market value of the property being transferred.
EXAMPLE 1. A son is indebted to his father for $10,000. The
son transfers real property with a fair market value of $12,000 to his father
as satisfaction of the indebtedness. No real estate transfer tax is due in this
situation.
EXAMPLE 2. A son is indebted to his father for $10,000. The
son transfers real property with a fair market value of $4,000 to his father as
satisfaction of the indebtedness. Real estate transfer tax is due on $6,000 in
this situation.
(13)
Assumption of debt. Any outstanding debt on the property
conveyed that is not assumed by the grantee is not to be included as
consideration in computing the amount of real estate transfer tax due.
EXAMPLE. Property with a mortgage of $40,000 is transferred
from A to B. B pays A $60,000 but does not assume the $40,000 mortgage. The
real estate transfer tax is to be computed on the $60,000 cash payment only. If
B had assumed the mortgage in addition to making the cash payment, the real
estate transfer tax would be computed on $100,000 (the sum of the payment and
mortgage).
(14)
Mergers, consolidations, and reorganizations. Conveyances of
real estate resulting from corporate or limited liability company mergers,
consolidations, or reorganizations are exempt from the real estate transfer
tax. The following definitions are intended to be general guidelines in
determining eligibility for exemption under this subsection.
"Merger" means the uniting of two or more
corporations or companies into one corporation or company in such manner that
the corporation or company resulting from the merger retains its existence and
absorbs the other constituent corporation(s) or company(ies) which thereby lose
its or their existence.
"Consolidation" means the uniting of two or
more corporations or companies into a single new corporation or company, all of
the constituent corporations or companies thereby ceasing to exist as separate
entities.
"Reorganization" means the transfer of
substantially all of the assets of one corporation or company to another
corporation or company where the persons having an interest in the old
corporation or company maintain substantially the same interest in the new
corporation or company.
This rule is intended to implement Iowa Code section
428A.1 as amended by 1996 Iowa
Acts, chapter 1167, and section
428A.2 as amended by 1996 Iowa
Acts, chapter 1170.
