In the state of New Hampshire, Real Estate Transfer Tax, or RETT, is paid by both the buyer and seller. This transfer tax is required for most typical transactions when the ownership of a property is transferred to the new owner. The current tax amount is $0.75 for every $100 of the sale price of the property. This amount is paid separately by both the seller and the buyer. The amount of money the buyer pays to the seller is referred to as the “legal consideration.” Once the Real Estate Transfer Tax has been paid, the Registrar of Deeds marks it with a tax stamp and records it within the official public documents.
At this point, you are probably thinking that you shouldn’t create a revocable trust for any real estate you have, thanks to the Real Estate Transfer Tax. However, in the state of New Hampshire, real estate placed within a revocable trust is exempt from the transfer tax.
Any real estate placed in a revocable trust allows the owner to transfer their legal ownership to the trustee. The new trustee is considered the caretaker, or manager, of the real estate. However, the trustee can also become the new owner of the property when the original owner transfers ownership completely and gives the trustee the real estate deed. The new deed will show that the new trustee is now the owner and a transfer of real estate has taken place.
Money is often involved in revocable trusts to go with real estate. In those scenarios, the trustee is also in charge of any money that is placed in the revocable trust.
Most of the time, married couples, and even single people transfer their real estate into revocable trusts without legal consideration or money involved. When the new real estate deed is signed, the seller on the deed is the same as the new buyer. In these scenarios, the person listed has two different sets of responsibilities.
While real estate placed in revocable trusts is not subject to the RETT, you will find there is a minimum tax of $40 to be paid for this type of transfer. This is a reasonable amount of money for peace of mind when it comes to ensuring your real estate assets will not be a part of probate after your death. Plus, since the minimum amount of tax was collected during the deed transfer, the new owner of your real estate will not need to pay the heftier Real Estate Transfer Tax.
If you have been putting off creating a revocable trust due to the Real Estate Transfer Tax, or you simply haven’t thought about this type of trust, contact our office today. We can help you determine if a revocable trust is a necessary part of planning for your future.