United States

New Hampshire: Merger of Multiple Entities with No Ownership Change Subject to Realty Transfer Tax

Jul 31, 2017
From KPMG TaxWatch

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The New Hampshire Department of Revenue Administration recently responded to a taxpayer’s request for a ruling that merging certain LLCs would not result in the application of real estate transfer tax. The three LLCs at issue were all owned by the same two members. Each member owned a 50 percent interest in each LLC. The LLCs all owned various types of real property, and some of the realty was mortgaged. The members, generally seeking to simplify their administrative burdens and streamline filings, planned to merge two of the LLCs into the third. When the mergers had been effectuated, each member would own 50 percent of the surviving entity, and the assets and liabilities of the members would be the same as it was prior to the merger. The members requested a ruling that the mergers would not create a taxable transfer of real estate.

Under New Hampshire law, real estate transfer tax is “imposed upon the sale, granting, and transfer of real estate and any interest therein including transfers by operation of law.” Further, each sale, granting, and transfer of real estate or an interest in real estate “shall be presumed taxable unless it is specifically exempt from taxation.” The taxpayers did not specify the exemption that they believed would apply to their situation, and, in the Department’s view, none of the statutory exemptions would apply. Notably, an exemption addressing the transfer of title pursuant to a merger, consolidation or other tax-free reorganization under IRC section 368 had been repealed many years ago. The Department ruled that the proposed mergers would not be exempt from real estate transfer tax. Please contact Yanina Reid at 617-988-5913 with questions on Declaratory Ruling No, 12204. 


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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.