§ 91.159. Transfers by will or intestate law.
(a) A document which evidences a specific or residuary devise of real estate by will or under intestate law and a document under an orphan’s court adjudication allocating realty to a surviving spouse as part of his exemption or allowance is not taxable under § 91.193(b)(7) (relating to excluded transactions) if the document is without consideration or for nominal actual consideration. A transfer made under the exercise of an option to purchase realty under a will is for consideration and is taxable, whether the transfer is a bona fide sale or not.
(b) If a joint interest in realty passes to two or more heirs or devisees by will or under intestate law, a subsequent transfer of division in kind between the heirs or devisees is not taxable under § 91.193(b)(5) unless the transfer is for consideration or an heir or devisee takes a share greater in value than his undivided interest. If the transfer is for consideration or an heir or devisee takes a share greater than his undivided interest, the property received by an heir or devisee is taxable to the extent of the value of the grantor’s interest under the will or under intestate law.
Example 1:By will, A, B and C inherited three lots of equal value as tenants in common. A, B and C convey one lot to A, one lot to B and one to C. The deeds are for nominal actual consideration. The three conveyances are not taxable under § 91.193(b)(5), because the value of each party’s share is equal to his undivided interest, the property divided passed by will, and the division was accomplished without additional consideration.
Example 2:Assume the same facts as in Example 1, except that B and C convey their interests in two lots to A for $10,000 and A conveys his one-third interest in the remaining lot to B and C. These conveyances are not wholly excludable under § 91.193(b)(5) or (7). Unless otherwise excludable—familial relationship, and the like—the lots conveyed to A are excludable only to the extent of A’s one-third interest under the will. The interest conveyed by A is fully taxable.
(c) If an interest in realty would have passed to an heir or devisee by will or under intestate law but for that heir’s or devisee’s disclaimer of the interest or family agreement, the value of the interest disclaimed is not wholly excludable from tax under § 91.193(b)(5) or (7) unless there is no or nominal consideration passing from the grantee to the heir or devisee for the disclaimer or the conveyance is otherwise excludable from tax.
Example:Assume the same facts as in Example 1 of subsection (b), except that B and C disclaim their interest in the two lots in exchange for A’s renunciation of all of his interest in the remaining lot and $10,000. In this situation § 91.193(b)(5) and (7) are inapplicable. The conveyances would be taxed the same as in Example 2 of subsection (b).
Authority The provisions of this § 91.159 issued under section 1107-C of the Tax Reform Code of 1971 (72 P. S. § 8107-C).
Source The provisions of this § 91.159 adopted September 9, 1988, effective September 10, 1988, 18 Pa.B. 4096.
Cross References This section cited in 61 Pa. Code § 91.193 (relating to excluded transactions).
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