January 24, 2020

A gRETT-able Situation: New Trends in German Real Estate Transfer Tax on Share Deals

January 24, 2020/ Ruchelman P.L.L.C.

For decades, the German Real Estate Transfer Tax Act ("gRETT Act") has imposed a transaction tax on the sale of real estate in Germany. In recent years, the tax has applied to the sale of shares that indirectly transfer real estate located in Germany. When initially enacted, a sale of all shares was taxable under the gRETT Act. In the year 2000, the triggering percentage was reduced to 95%. Last year, proposed legislation would have reduced the triggering percentage to 90%, but the draft bill was never enacted. In 2020, the triggering percentage may be reduced to as low as 75% or some other percentage whenever new legislation is adopted. Exactly what constitutes an indirect sale of German real estate is surprisingly broad, and unlike comparable taxes in other countries, the sales need not be related nor contemporaneous. In recent years, a populist clamor has arisen to broaden the scope of indirect transfers subject to the tax. Michael Schmidt of Schmidt Taxlaw, Frankfurt am Main, Germany, explains how and when the tax is imposed under current law and how it may be modified in the coming months.

May 30, 2019

New York State Says No to Annual Pied-A-Terre Tax, Yes to Increased Real Estate Transfer Taxes

May 30, 2019/ Ruchelman P.L.L.C.

As part of New York State’s annual budget process, law makers proposed an annual pied-à-terre tax on homes worth $5 million or more that do not serve as the buyer’s primary residence. At the last minute, the tax was dropped and replaced by a 0.25 percentage point increase to the real estate transfer tax on sellers and a new graduated mansion tax, a special transfer tax imposed on purchasers. Nina Krauthamer addresses the ins and outs of both taxes.

March 27, 2017

New Developments in the World of Reverse Like-Kind Exchanges

March 27, 2017/ Ruchelman P.L.L.C.

Tax planners to New York City real estate families understand that real estate should never be sold. Rather, it should be exchanged in a tax-free, like-kind exchange. The exchange can be bifurcated into two independent transactions – one a purchase and the other a sale – without affecting tax-free treatment, provided certain well identified rules are followed. Moreover, the replacement can be acquired before the sale of an existing parcel is effected. In a recent advisory opinion affecting property in New York State, the Department of Taxation and Finance issued a taxpayer-friendly advisory opinion involving real estate transfer tax exposure in a reverse like-kind exchange. Rusudan Shervashidze and Nina Krauthamer explain the ruling.

November 30, 2016

In the Matter of GKK 2 Herald LLC – Effects of the Step Transaction Doctrine

November 30, 2016/ Ruchelman P.L.L.C.

Clients that invest in U.S. real property have discovered that income tax planning for the structure is only once piece of the planning puzzle. A second piece relates to the imposition of transfer taxes on the sale. If the property is in New York City, planning must consider the real property transfer tax rules of both the city and New York State. Both jurisdictions impose tax. Rusudan Shervashidze looks at recent cases in the State of New York Division of Tax Appeals Tribunal and the New York City Appeals Tribunal involving the same plan, implemented by the same taxpayer, regarding the same parcel of real property. For New York State purposes, the plan was successful. However, for New York City purposes, the plan was overturned. The statutes at the state and city level are almost identical.