New York Updates Transfer Tax Reporting Requirements for LLCs | Practical Law

New York Updates Transfer Tax Reporting Requirements for LLCs | Practical Law

New York recently amended the real estate transfer tax reporting requirements for limited liability companies involved in the transfer of a building containing one- to four- family dwelling units. The changes aim to increase transparency in real estate transactions.

New York Updates Transfer Tax Reporting Requirements for LLCs

Practical Law Legal Update w-022-1415 (Approx. 3 pages)

New York Updates Transfer Tax Reporting Requirements for LLCs

by Practical Law Real Estate
Published on 24 Sep 2019 • New York
New York recently amended the real estate transfer tax reporting requirements for limited liability companies involved in the transfer of a building containing one- to four- family dwelling units. The changes aim to increase transparency in real estate transactions.
Transfers of real estate in New York are subject to real estate transfer tax (see State Transfer Tax Comparison Chart). To report applicable transfer tax on the transfers of residential real estate, grantors and grantees must jointly file tax form TP-584, or TP-584-NYC where the property is located in New York City. These forms require information about:
  • The real property.
  • The seller.
  • The purchaser.
On September 13, 2019, the New York state legislature passed Senate Bill S1730 (the Senate Bill), which creates additional reporting requirements on the transfer of a building containing one- to four- family dwelling units where the grantor or grantee is a limited liability company (LLC). The new reporting requirements, which are intended to increase transparency in real estate transactions, are effective immediately.
On November 4, 2019, the New York Department of Taxation and Finance issued Technical Memorandum TSB-M-19(2)R, clarifying that the Senate Bill applies to a deed transfer of a building containing one- to four- family dwelling units, not to the sale of individual condo units.

Senate Bill No. 1730

The Senate Bill amends N.Y. Tax Law § 1409 and New York City Administrative Code, § 11-2105 to require LLCs involved in a real estate transaction that requires the filing of a TP-584 or TP-584-NYC to report the names and business addresses of the LLC's:
  • Members.
  • Managers.
  • Other authorized persons.
If a member or manager is another LLC or business entity rather than an individual, the LLC must report the names and business addresses of that LLC or business entity's:
  • Shareholders.
  • Directors.
  • Officers.
  • Members.
  • Managers.
  • Partners.

Practical Implications

If representing an LLC in a transaction involving a deed transfer of a building containing one- to four- family dwelling units, real estate counsel should be aware of the new transfer tax reporting requirements when filing a TP-584 or TP-584-NYC. The newly required information should be obtained early in the transaction to avoid delays to the closing process.
For more information on transfer taxes in New York, see Practice Note, Real Estate Transfer Taxes (NY) and State Q&A, Real Estate Ownership: New York: Questions 10 and 11.
For information on buying and selling residential real estate in New York, see Practice Note, Key Considerations in Buying and Selling Residential Real Estate (NY).