Temporary measure allows LGBT tax-free property transfers

Temporary measure allows LGBT tax-free property transfers

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After pressure from LGBT advocates, the city has developed a temporary procedure that allows unmarried couples to transfer property without being taxed by the city.

The procedure will stay in effect until the city’s Department of Revenue implements a permanent regulation, which is expected to occur by Sept. 30.

Prior to 2007, the city required unmarried same-sex or opposite-sex couples who wanted their partners placed on a deed to pay a transfer tax.

The city tax amounted to 3 percent of the fair-market value of the house.

Property transfers between legal spouses have always been tax-exempt under city policy. But advocates said this policy disproportionately affected LGBT couples because Pennsylvania does not recognize same-sex marriages.

In November 2007, Philadelphia City Council attempted to rectify the inequity by enacting a law exempting financially interdependent couples — both same-sex and opposite-sex — from the transfer tax.

The ordinance stated that financially interdependent persons must have lived together for at least six months, must have shared the common necessities of life and must have been responsible for each other’s welfare.

However, the ordinance didn’t specify the evidence needed to determine eligibility.

Instead, the ordinance directed the revenue department to specify “any additional evidence such persons must submit to establish their eligibility for this exemption, except where individuals are registered as Life Partners.”

To be designated as life partners, couples must register with the city’s Human Relations Commission and provide specific evidence of their life partnership, such as a joint back account or reciprocal insurance policies.

This past January, the AIDS Law Project of Pennsylvania began advocating for an East Oak Lane man who wanted his male lover’s name placed on the deed of the house where they live.

Adding the name to a deed is considered a property transfer that would be taxed by the city if an exemption isn’t approved.

Since the men have lived together for 17 years — and considered themselves to be financially interdependent — they wanted city officials to grant the exemption.

“The process became stalled because the revenue department hadn’t developed a regulation — or temporary procedure — to permit this type of transaction, with no city tax,” said Ronda B. Goldfein, executive director of the AIDS Law Project.

One of the men didn’t wish to be designated as a life partner. But even if he did — and the men registered as life partners — it’s unclear whether the department would have processed the transaction without a city tax, Goldfein said.

“Nobody at the revenue office seemed to know anything about the tax exemption — whether it be for life partners or other financially interdependent couples,” she said. “It wasn’t the workers’ fault. Nobody told them what to do.”

She said it was frustrating to wait for the interim procedure.

“I felt very concerned for my clients. They weren’t able to take advantage of the benefit to which they were entitled for several months, due to the delay. It wasn’t a question of making the system user-friendly. The process didn’t exist. It was a question of creating the process.”

Goldfein commended Rue Landau, executive director of the city’s Commission on Human Relations, for helping to implement the temporary procedure.

“I worked with several city officials, and they were more than happy to work together to resolve this situation,” Landau told PGN. “It was a long process. But it’s gratifying that we’re moving toward a final resolution of the matter.”

The temporary procedure requires a couple to sign an affidavit certifying their status as financially interdependent persons, under penalty of perjury. It does not require additional supporting evidence.

City Revenue Commissioner Keith J. Richardson said he hopes the permanent regulation will be in place by Sept. 30.

“We understand that something should be in place, and we will look at getting the regulation in place, in accordance with the ordinance that was passed back in 2007,” he said.

Richardson added that he didn’t know whether the temporary procedure would become the permanent regulation.

“It’s temporary; it may not be the final solution,” he said. “When my staff and I sit down and review everything, we will properly vet it to come up with some kind of final regulation. We will look at the temporary procedure. We may incorporate it, we may not.”

Goldfein said her clients saved about $2,879 due to the transfer-tax exemption, but they still had to pay a state realty-transfer tax of about $959.

Their home is valued at $96,000, she said.

Their new deed was filed under both men’s names at the city Department of Records on May 26, according to Goldfein.

“Having both names on a deed is another way for people to cement their relationship.”

Goldfein added the temporary measure has adequate safeguards to prevent fraud, but stopped short of saying it should become the permanent regulation.

“We think that a person’s affirmation under penalty of perjury should be sufficient,” she said. “The interim step satisfactorily responds to the needs of all the parties. If and when a final regulation is issued, we’ll assess it at that time.”

Tim Cwiek can be reached at (215) 625-8501 ext. 208.

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