​​​​​​​ Value of Property (Subject to Transfer Fee)

1. If I gift property to my children and grandchildren while retaining a life estate, is there a formula I should use to calculate the value of the remainder being conveyed?


2. Is there a table we can use to calculate the value of the remainder interest being conveyed?


3. The Real Estate Transfer Return instructions indicate that the "real estate value transferred" can be zero (0) for Exemptions 3, 10, 13 and 17. Why is there no value and why can I enter a zero?


4. What is the value subject to fee on a conveyance of a vacant lot with a contract to construct a building?

Will, Descent or Survivorship

1. If four siblings receive real estate and other assets in equal shares per a will, does state law (sec. 77.25(11), Wis. Stats.), "By will, descent or survivorship" apply where an agreement between the heirs states one heir will receive the real estate and the remaining heirs will receive other assets?


2. A trust beneficiary receives a Trustee's Deed using Exemption 11 on the transfer return. Does it qualify for Exemption 11, by will descent or survivorship?


3. Is a sale per a will exempt from transfer fee under state law (sec. 77.25(11), Wis. Stats.)?

Value of Property (Subject to Transfer Fee)

1. If I gift property to my children and grandchildren while retaining a life estate, is there a formula I should use to calculate the value of the remainder being conveyed?
   

   Yes. For the return, use the fair market value of the property actually being transferred. To calculate, take the property's fair market value and multiply it by a factor from the table in the Wisconsin Department of Health and Family Services Medicaid Eligibility Handbook.

   The value gifted to the children is exempt from the transfer fee per state law (sec. 77.25(8), Wis. Stats.), while the value gifted to the grandchildren is subject to the transfer fee. On the ​RETR "Fee computation" page, enter the total value in "Total value of real estate transferred" as calculated using the tables referred to above; and in the "Value subject to fee," enter the calculated value to the grandchildren. Select "8" in the exemption selection dropdown.

2. Is there a table we can use to calculate the value of the remainder interest being conveyed?
   

   Yes. You may use the table in the Wisconsin Department of Health and Family Services Medicaid Eligibility Handbook, located at: emhandbooks.wi.gov/meh-ebd. The value required on the return is the fair market value of the remainder being transferred. To calculate, multiply the entire property's fair market value by the factor in the table from the handbook's appendix.

3. The Real Estate Transfer Return instructions indicate that the "real estate value transferred" can be zero (0) for Exemptions 3, 10, 13 and 17. Why is there no value and why can I enter a zero?
   

   Zero (0) may be entered as the real estate value transferred for the following exemptions:

   • Sec. 77.25(3), Wis. Stats. - "Which, executed for nominal, inadequate or no consideration, confirms, corrects or reforms a conveyance previously recorded." Under Exemption 3, the real property previously conveyed on the deed is now being corrected. Since the correction deed does not convey any fee simple interest, the value is zero (0).

   • Sec. 77.25(10), Wis. Stats. - "Solely in order to provide or release security for a debt or obligation." This type of document does not convey any real estate; it simply places or removes a lien or cloud on the title.

   • Sec. 77.25(13), Wis. Stats. - "Of real estate having a value of $1,000 or less." If the property has no value, you may enter zero (0). You cannot use special use valuations for purposes of this exemption.

   • Sec. 77.25(17), Wis. Stats. - "Of a deed executed in fulfillment of a land contract if the proper fee was paid when the land contract or an instrument evidencing the land contract was recorded." In Wisconsin, ownership of real estate is transferred when you enter a land contract. If you paid the transfer tax at that time, the deed in fulfillment of the land contract is essentially a satisfaction of the financing, and is not a conveyance.

4. What is the value subject to fee on a conveyance of a vacant lot with a contract to construct a building?
   

   The value subject to transfer fee is only the value of the real property at the time of conveyance. The improvement value is included with the lot value only on the percentage of improvements completed at the time of conveyance.

   Examples:

   1. If there is only a vacant lot with a construction contract - include lot value only

   2. Improvements are 50 percent completed - include lot value plus 50 percent of the value of the improvements

   3. Improvements are 100 percent completed - include lot value plus total value of the improvements
      

   For more information, review R and R Development Group, LLC v. Wisconsin Department of Revenue, Wisconsin Tax Appeals Commission, Docket No. 97-T-212, Decision and Order dated February 11, 1999.

Will, Descent or Survivorship

1. If four siblings receive real estate and other assets in equal shares per a will, does state law (sec. 77.25(11), Wis. Stats.), "By will, descent or survivorship", apply where an agreement between the heirs states one heir will receive the real estate and the remaining heirs will receive other assets?
   

   Yes. In this case, the conveyance is by will, descent or survivorship and Exemption 11 applies. However, if the heir receiving the real estate has to pay the estate or siblings any consideration, that amount is subject to transfer fee. This may happen when the real estate value is greater than the other assets and the payment to the estate ("boot") creates equal shares. In this case, when completing the "Fee computation" page in the return, the total real estate value conveyed is the property's fair market value. The total value subject to fee is the amount paid to the estate; select Exemption 11 for the balance of the total real estate value.

2. A trust beneficiary receives a Trustee's Deed using Exemption 11 on the transfer return. Does it qualify for Exemption 11, by will descent or survivorship?
   

   No. The exemption per state law (sec. 77.25(11), Wis. Stats.), only applies to conveyances from an estate (deceased individual) made by will, decent or survivorship. The Trustee's Deed is exempt instead under sec. 77.25(9), Wis. Stats., "from a trustee to a beneficiary," as long as no consideration was exchanged.

3. Is a sale per a will exempt from a transfer fee under state law (sec. 77.25(11), Wis. Stats.)?
   

   No. The sale price is the value subject to transfer fee.
   

Questions?

Contact us at RETR@wisconsin.gov.