Section 43 Deeds Excise Clarifications 1

Chapter 64D of the General Laws is hereby amended by striking out section 1 and inserting in place thereof the following section:-

          Section 1. There shall be levied, collected and paid, for and in respect of the deeds, instruments and writings hereinafter mentioned and described, or for or in respect of the vellum, parchment or paper upon which such deeds, instruments or writings, or any of them are written or printed, the excise taxes herein specified:- Deed, instrument or writing, whereby any lands, tenements or other realty sold shall be granted, assigned, transferred or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his, her or their direction, when the consideration of the interest or property conveyed, exclusive of the value of any lien or encumbrance not to exceed $1,000,000 remaining thereon at the time of the sale, exceeds $100 and does not exceed $500, $2; and for each additional $500 or fractional part thereof, $2; provided, however, that in Barnstable county, the excise tax herein specified shall be $2.50 for each $500 or fractional part of said consideration, excluding a consideration of between $0 and $100. Notwithstanding any other provisions of this section or any other general or special law to the contrary, Nantucket county may disburse and expend deposits in said Funds for the purpose of facilities and programs related to law enforcement, including the planning, improving or constructing of police stations and other related facilities and programs. The excise tax shall also apply to a transfer or acquisition of a controlling interest in an entity with an interest in real property. In the case of such a transfer or acquisition, the consideration subject to the excise tax is the portion of the total consideration reasonably attributable to the real property, without deduction for the value of any lien or encumbrance remaining thereon at the time of the sale. Said excise tax shall be payable at the registry of deeds in the county in which the real property lies, regardless of whether the transfer or acquisition is evidenced by a deed, instrument, or other writing or whether such deed, instrument, or other writing is otherwise recorded. This chapter shall not apply to any instrument or writing given to secure a debt or to any deed, instrument or writing to which the commonwealth, a city or town of the commonwealth, or the United States or any of their agencies are a party.

          For the purposes of this chapter, unless otherwise expressly stated, the following words shall have the following meanings:

          "Interest in real property", includes, but is not limited to, an estate in fee simple, a beneficial interest, a life estate, a perpetual easement or a leasehold or sublease interest, ordinary or proprietary, but only where the sum of the term of the lease or sublease and any options for renewal, extension, or the like exceeds 49 years.

          "Transfer or acquisition of a controlling interest", in the case of a corporation which has an interest in real property, occurs when a person, or group of persons acting in concert, transfers or acquires, directly or indirectly, including through the transfer or acquisition of an interest in another entity, a total of 50 per cent or more of the total combined stock of the corporation, by vote or value. In the case of any partnership, limited liability company, association, trust, or other non-corporate entity having an interest in real property, the transfer or acquisition of a controlling interest therein occurs when a person, or group of persons acting in concert, transfers or acquires, directly or indirectly, including through the transfer or acquisition of an interest in another entity, a total of 50 per cent or more of the capital, profits, or beneficial interest in the entity.

          Persons are considered to be acting in concert when they have a relationship such that one person influences or controls the actions of another. Where the individuals or entities are not commonly controlled or owned, persons shall be considered to be acting in concert when the unity with which the sellers or purchasers have negotiated and will consummate the transfer of ownership interests indicates that they are acting as a single entity. If the transfers or acquisitions are completely independent, each seller selling or purchaser buying without regard to the identity of the other sellers or purchasers, then the transfers or acquisitions shall be treated as separate transfers or acquisitions.
For purposes of determining whether a controlling interest is transferred or acquired, only transfers or acquisitions of interests occurring on or after the effective date of this section shall be added together. Where there is a transfer or acquisition of an interest in an entity that has an interest in real property on or after the effective date, and subsequently there is a transfer or acquisition of an additional interest or interests in the same entity, the transfers or acquisitions shall be added together to determine if a transfer or acquisition of a controlling interest has occurred. No transfer or acquisition of an interest in an entity that has an interest in real property shall be added to another transfer or acquisition in the same entity if they occur more than 3 years apart, unless the transfers or acquisitions are so timed as part of a plan to avoid the excises herein specified.

          Notwithstanding the foregoing, a bona fide pledge of stock, partnership or other interest as loan collateral, or any conveyance of publicly traded stock, partnership or other interest, shall not be considered subject to taxation under this chapter.

          The commissioner shall promulgate regulations or other guidance to implement this section.

This section, together with a related section, imposes deeds excise on transfers of controlling interests in entities holding real property and caps the deduction for assumed mortgages in calculating the deeds excise.