As a result of certain changes under the rules governing the imposition of the Pennsylvania realty transfer tax and the Pennsylvania Associations Code over the past several years, the owners of parcels of real property in the name of a general partnership can now avail themselves of a simple method by which the general partnership can be converted into a limited liability entity without incurring any Pennsylvania realty transfer tax. By doing so, the owners can obtain the “full liability shield” that is available under Pennsylvania law to protect the owners from personal liability thereafter arising from the ownership of the real estate parcels.
Attorneys in our Business & Finance Department have prepared a pair of articles that address issues concerning this conversion method. Lee Piatt’s article, “Tip to Realty Transferor: With Two Definitions for ‘Conversion,’ Use Both,” describes certain steps that can be taken in connection with such conversion process to increase the likelihood that the conversion will be deemed to be exempt from Pennsylvania realty transfer tax. Lee’s article can be viewed here: http://www.pabar.org/buslaw/PiattFall2019.pdf
An article prepared by Paul Rushton, the Chair of our Business & Finance Department, describes how the above-referenced changes to the Pennsylvania Associations Code and realty transfer tax rules have eliminated the justifications for continued ownership of real estate through general partnerships. Paul’s article can be viewed here: http://www.pabar.org/buslaw/Rushton.pdf
If you have any questions about these articles and/or would like to learn more about this conversion method, please contact Paul (firstname.lastname@example.org) or Lee (email@example.com) via e-mail or call (570)826-5600.