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Real Estate Impact: Documentary Transfer Tax Act

| Jun 18, 2014 | Real Estate

Effective January 1, 2015, the Documentary Transfer Tax Act is changing and it will impact real estate professionals.

The California Documentary Transfer Tax Act (Cal. Rev. and Tax. Code Section 11901 et seq.)(the “Act”) authorizes a county or city to impose a tax with respect to specified instruments that transfer interests in real property. Prior to recording a deed or other specified instrument, the Act requires a signed declaration of the amount of documentary transfer tax due on the face of the document or on a separate paper as provided.

On June 4, 2014, Governor Brown signed Assembly Bill 1888 into California law and it will become effective January 1, 2015. Pertinently, Section 11932 of the California Revenue and Taxation Code has been amended to require “every document subject to tax that is submitted for recordation” to “show on the face of document the amount of tax due.” This bill eliminates the requirement that, upon request, the amount of tax due be shown on a separate paper affixed to the document.

This legislative change is important to all real estate practitioners and estate planning professionals that regularly record deeds or other instruments that transfer specified interests in real property. If you have questions regarding this new law, the California Documentary Transfer Tax Act, or the requirements of transferring a property, call the experienced real estate attorneys at The Loftin Firm, P.C.