Joint Venture transactions involving entities owning real property in New York can sometimes raise complicated New York State and City real property transfer tax questions. A recent case, State ex rel. Saric v. GFI Breslin, LLC, No. 101812/2018 (Sup. Ct. Apr. 16, 2021) illustrates many of the issues that can arise.
New York State and New York City each imposes a real property transfer tax. For commercial real estate located in New York City, the highest New York State rate is 0.65% and the highest New York City rate is 2.625%, for a combined total of 3.275% of the consideration. The taxes are imposed both on transfers of direct interests in real property, such as fee interests and tenancy-in-common interests (regardless of percentage interest), as well as on transfers of controlling interests in entities that own real property. A “controlling interest” is defined as 50% or more of the stock of a corporation or 50% or more of the capital, profits, or beneficial interests in a partnership, limited liability company, trust, or other entity.
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