Documentary Transfer Tax Exemptions

Documentary Transfer Tax Exemptions as noted in my previous article regarding documentary transfer taxes, the taxes collected are a nice, hefty revenue source for counties and cities throughout California so they are loath to give away the right to collect it without some explanation. The Revenue and Taxation Code does allow for “exemptions” to the payment of this tax, as long as the exemption is allowed by the Code.

When claiming the exemption, the transfer document (deed or quitclaim deed) must have one of the following accepted recitals on it:

  1. Conveyance Given for No Value
      “This is a bonafide gift and the grantor received nothing in return, R & T 11911.”
  2. Conveyance to Establish Sole and Separate Property of a Spouse
      “This conveyance establishes sole and separate property of a spouse, R & T 11911.” “It the express intent of the Grantor, being spouse of the Grantee, to convey all right, title and interest of the Grantor, community or otherwise, in and to the herein described property, to the Grantee as his/her sole and separate property.”
  3. Conveyance to Confirm a Community Property Interest when property was purchased with Community Property Funds
      “This conveyance confirms a community property interest, which was purchased with Community Property Funds, R & T 11911.”
  4. Conveyances transferring interests into or out of a Living Trust
      “This conveyance transfers an interest into or out of a Living Trust, R & T 11930.”
  5. Conveyance Changing Manner in Which Title is Held
      “This conveyance changes the manner in which title is held, grantor(s) and grantee(s) remain the same and continue to hold the same proportionate interest, R & T 11911.”
  6. Conveyance Confirming Title in Grantee
      “This conveyance confirms title to the grantee(s) who continue to hold the same interest acquired on Date _____, Document No._____wherein $________ Documentary Transfer Tax was paid, R & T 11911.”
  7. Conveyance from Individual(s)/Legal Entity(ies) to Individual(s)/Legal Entity(ies) Where the Grantors and Grantees Are Comprised of the Same Parties, and Parties Continue to Hold the Same Proportionate Interest. (Exception: Dissolution of a Partnership. R & T 11925[b])
      “The grantors and the grantees in this conveyance are comprised of the same parties who continue to hold the same proportionate interest in the property, R & T 11925 (d).”
  8. Conveyance in Dissolution of Marriage
      “This conveyance is in dissolution of marriage by one spouse to the other, R & T 11927.”
  9. Conveyance to Confirm a Change of Name
      “This conveyance confirms a change of name, and the grantor and grantee are the same party, R & T 11911.”
  10. Conveyances Where the Liens and Encumbrances Are Equal or More Than the Value of Property, and No Further Consideration is Given
      “The value of the property in this conveyance, exclusive of liens and encumbrances is $100.00 or less, and there is no additional consideration received by the grantor, R & T 11911.”
  11. Conveyance to Secure a Debt
      “This conveyance is to secure a debt, R & T 11921.”
  12. Court Ordered Conveyances Not Pursuant to Sale
      “This is a court-ordered conveyance or decree that is not pursuant to sale, R & T 11911.”
  13. Reconveyance upon Satisfaction of a Debt
      “This is a reconveyance of realty upon satisfaction of a debt, R & T 11921.”
  14. Conveyances from a Trustee Under a Land Contract at the Consummation of the Contract
      “This is a conveyance of equitable title from a trustee, under a land contract, to the vendee at the consummation of the contract, R & T 11911.”
  15. Conveyances of an Easement or Oil and Gas Lease Where the Consideration and Value is Less Than $100.00
      “This is a conveyance of an easement (Oil and Gas Lease) and the consideration and value is less than $100.00, R & T 11911.”

To complicate matters, several counties now have a special “Documentary Transfer Tax Affidavit” that needs to be signed “under penalty of perjury” and attached to the Preliminary Change of Ownership form. All these forms have to be attached to that Grant Deed or Quitclaim Deed before the County will accept it for recording.

Here are the counties (as of May, 2011) which have the special “Affidavit” and their requirements:

The exemption declaration, together with the proper completion of the Preliminary Change of Ownership form, also serves the purpose of notifying the County Tax Assessor’s office that the transfer is not a true purchase/sale transaction and therefore the property taxes should not be re-assessed.

It must be noted that just because the exemption clause and non re-assessment of taxes have been typed on the documents and requested, it can still be disallowed by the government agencies.

Feel free to access our transfer tax calculator program (see link under our title heading). If you should have questions on whether your transaction is or is not exempt, please call us at # (626) 584-9999 so that we may clarify any questions you may have.

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