HOUSE BILL NO. 462
AS AMENDED BY HOUSE AMENDMENT NO. 1
AN ACT TO AMEND CHAPTER 54, TITLE 30, DELAWARE CODE, RELATING TO THE REALTY TRANSFER TAX.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (three-fifths of all members elected to each House thereof concurring therein):
Section 1. Amend §5401. Title 30, Delaware Code, by adding a new subsection (7) to said Section, to read as follows:
"(7)(a) Except as provided in subparagraphs (7)(b) and (7)(c) of this subsection, where beneficial ownership in real estate is transferred through a conveyance or series of conveyances of intangible interests in a corporation, partnership, or trust, such conveyance shall be taxable under this Chapter as if such property were conveyed through a duly recorded 'document' as defined in subsection 5401(1) of this Chapter, and subject to the exemptions contained therein, except those exemptions contained in subsection (1)(j) and (1Xn).
(b) No bona fide pledge of stock or partnership interests as loan collateral nor any transfer of publicly traded stock or publicly traded partnership interest shall be deemed subject to taxation under subsection (7) of this section;
(c) Where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in subsection (7) of this Section own 80% or more of the beneficial interest in the real estate following said conveyance or conveyances, such transfers shall not be subject to tax under subsection (7) this Section. Where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in subsection (7) of this Section own less than 80% of the beneficial interest in the real estate following said conveyance or conveyances, such transfers shall not be subject to tax under subsection (7) of this Section, unless, under regulations promulgated by the Secretary of Finance, such transfer or transfers are properly characterized as a sale of real property. Such characterization shall take into account the timing of the transaction, beneficial ownership prior to and subsequent to the conveyance or conveyances: the business purpose of the corporation. partnership or trust; and such other factors as may be relevant."
Section 2. Amend Chapter 54. Title 30 of the Delaware Code by adding thereto a new §5414 to read as follows:
"§5414. Tax Lien
The provisions of Chapter 29, Title 25 of the Delaware Code shall not apply to taxes arising under this Chapter."
Section 3. Amend Chapter 54, Title 30 of the Delaware Code by adding thereto a new §5415 to read As follows!
If any provision of this chapter or the application of any section or part thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this chapter which can be given effect without the invalid provision or application."
Section 4. The provisions of this Act shall become effective January I. 1987.
Approved July 3, 1986.