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Transfer tax exemption

Maryland High Court Holds Transaction Exempt from Transfer and Recordation Taxes


In a reported opinion issued August 22, 2008 in Wildwood Medical Center, LLC v. Montgomery County, the Maryland Court of Appeals held that the transfer of real estate from a general partnership to an LLC qualified for a statutory exemption. 

The property owner claimed that while it was titled in the name of individuals, that they were doing business as a Maryland partnership.  The County rejected the request because the property was never titled in the name of the partnership.  The Court plainly articulated: "[b]y the plain and ordinary meaning of § 12-108(y)(2), the statutory exemptions apply to the subject deed. The transferor was a Maryland general partnership. The partnership confirmed its existence by the terms of a written partnership agreement. The intent of the members to carry on as a partnership was manifested by the fact that they filed U. S. Partnership Tax Returns for years previous to executing the formal agreement, specifically 2000 through 2003. The transferee was a limited liability company composed of the same members that comprised the partnership. The same members executed the subject deed, the “instrument of writing” that transferred title to the real property."  Opinion at p. 9.

In order to record the conveyance, the LLC was required by Montgomery County to pay recordation and transfer taxes.  The LLC appealed seeking a refund.  The Maryland Tax Court granted the request for refund.  That decision was affirmed by the Circuit Court for Montgomery County.  The Court of Appeals affirmed the decision


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