In New Hampshire, the state administers the transfer tax and municipalities administer the property tax. Grantees are required to file a form with the Department of Revenue Administration disclosing the consideration paid and why it may not reflect fair market value. Furthermore, the transfer tax stamps are affixed to the first page of deeds, so it is easy to determine what the parties believed the consideration to be. This information is readily available to assessors. Most use it, but some do not.
One disconnect between the transfer tax and the property tax is the allocation between real and personal property. Parties sometimes are more aggressive carving out the value of personalty at the transfer tax stage, while others focus more on this issue when the time comes to challenge the property tax assessment.
A recent hot button issue in New Hampshire has been the taxability of real estate transfers to entities (usually limited liability companies) owned all or in part by the transferor. While the statute exempts “non-contractual transfers” (gifts), the Department of Revenue Administration abruptly took the position six years ago these transfers are not gifts because the grantor receives a membership interest and limited liability in return. The DRA began digging through its records and assessing taxes, interest and penalties on transactions most lawyers considered to be exempt. Things have settled down, but only because most people conceded the DRA’s position; however, recent superior court decisions have scaled back the DRA’s interpretation of the statute.
Alfano Law Office, PLLC is New Hampshire’s sole member of NAPTA.