Which states tax the transfer of a controlling interest in an entity that owns real estate, and at what threshold?

Why entity transfers are taxed, and the four design choices

A real estate transfer tax is traditionally a tax on a recorded instrument: the deed, or a long-term lease, presented to the recorder. An entity that holds title can change hands without any instrument touching the land records, because the entity, not its owners, remains the record owner. The controlling interest rules close that gap by treating a change in the entity's ownership as a conveyance of the entity's real property. They are built from the same four parts everywhere.

The threshold. Some states tax 50 percent or more, some more than 50 percent, some only a far larger block, and one any interest at all.

The entity. Some statutes reach any entity with an interest in real property in the state. Others reach only a "real estate entity" or "real estate company," defined by the share of its assets or receipts that comes from real property.

The aggregation rule. Control is rarely sold in one block when the tax is large. Most statutes add together transfers made within a fixed period, and most add together acquisitions by persons acting in concert, so that a staged sale or a group of buyers is tested as a single acquisition.

The measure. The tax may be measured by the consideration paid, by the fair market value of the real property, by a pro rata share of that value, or by an assessed value, and the answer changes when the entity owns operating assets as well as land.

The jurisdictions that draw the line at 50 percent

Washington. The real estate excise tax defines "sale" to include "the transfer or acquisition within any 36 month period of a controlling interest in any entity with an interest in real property located in this state for a valuable consideration" (RCW 82.45.010(2)(a)). A controlling interest is 50 percent or more of the voting power of a corporation's stock, or 50 percent or more of the capital, profits or beneficial interest in any other entity (RCW 82.45.033). The Department of Revenue's rule records that chapter 424, Laws of 2019 extended the lookback from twelve months to thirty-six months effective January 1, 2020 (WAC 458-61A-101). Acquisitions by persons acting in concert are aggregated (RCW 82.45.010(2)(c)), and the rule lists the factors that show concerted action: closeness in time, a small number of buyers, mutual contract terms and side agreements, with wholly independent purchases treated as separate acquisitions (WAC 458-61A-101(5)). For an option, the date the option agreement was executed, not the exercise date, is the transfer date for the 36-month test (RCW 82.45.010(2)(b)).

The measure is "the true and fair value of the real property owned by the entity and located in this state" (RCW 82.45.030(2)). Where that value cannot reasonably be determined, the rule allows an appraisal or a Section 1060 asset allocation, and failing both, "the market value assessment for the property maintained on the county property tax rolls" at the time of sale (RCW 82.45.030(4); WAC 458-61A-101(4)). The seller is generally liable, the Department may instead pursue the entity or, depending on the entity type, the person who acquired or transferred control (RCW 82.45.033), and unpaid tax is a specific lien on each Washington parcel the entity owns (WAC 458-61A-101(7)). Where no instrument is recorded, the seller reports the sale to the Department on Form 84-0001B within five days of the sale, and separately the entity reports to the Secretary of State transfers of a controlling interest, or of at least one-third of one, under RCW 43.07.390 (WAC 458-61A-101(8)). The rates are graduated by portion of the selling price, with thresholds adjusted every four years (RCW 82.45.060).

New York State. "Conveyance" includes the "transfer or acquisition of a controlling interest in any entity with an interest in real property" (Tax Law section 1401(e)). A controlling interest is 50 percent or more of the total combined voting power of a corporation's stock, or of the capital, profits or beneficial interest in its voting stock, and for any other entity 50 percent or more of the capital, profits or beneficial interest (Tax Law section 1401(b)). For these transfers, consideration means the fair market value of the real property, apportioned by the percentage of the ownership interest transferred or acquired (Tax Law section 1401(d)). The Department of Taxation and Finance's Publication 576, Transfer or Acquisition of a Controlling Interest in an Entity with an Interest in Real Property (June 2008), states that transfers in separate transactions within three years are added together, that transfers further apart are also added together if timed as part of a plan to avoid the tax, and that fair market value is not reduced by mortgages. Grantor and grantee file a joint Form TP-584 within 15 days, the grantor bears the base tax, and the grantee becomes jointly liable if the grantor fails to pay (Publication 576; Tax Law section 1404).

Because a controlling interest transfer is a "conveyance," the additional taxes also reach it. Section 1402-a imposes the 1 percent tax on a conveyance of residential real property "or interest therein" where the consideration is $1 million or more, payable by the grantee, and Publication 576 applies it to an entity holding a one-, two- or three-family house, a condominium unit or a cooperative unit. In a city of one million or more, section 1402(a) adds a further $1.25 per $500 to the base $2 per $500 where consideration is $3 million or more for residential property or $2 million or more for other property, and section 1402-b imposes a graduated supplemental tax on residential conveyances of $2 million or more, rising by bracket to 2.9 percent at $25 million.

New York City. The city's real property transfer tax reaches the same kind of transaction on its own terms. The Department of Finance states that the tax applies to "the sale or transfer of at least 50% of ownership" in a corporation, partnership, trust or other entity that owns or leases city property, under Title 11, Chapter 21 of the Administrative Code. A New York City entity sale is therefore tested twice, once under Tax Law Article 31 and once under the city chapter.

New Jersey. New Jersey's controlling interest transfer tax (N.J.S.A. 54:15C-1) is narrower in scope and, since 2025, steeper in rate. The Division of Taxation's Form CITT-1 (rev. 9-26) defines a controlling interest as more than 50 percent of the voting power of a corporation, or more than 50 percent of the beneficial ownership of the real property for any other entity, and confines the tax to Class 4A commercial property, which is income-producing property other than vacant land, residential, farm, industrial and apartment property. The tax applies only where the consideration, or the equalized assessed value, exceeds $1 million. Under P.L. 2025, c. 69, effective July 10, 2025, the rate is graduated, 1 percent over $1 million up to $2 million, 2 percent up to $2.5 million, 2.5 percent up to $3 million, 3 percent up to $3.5 million and 3.5 percent above that, and the tax is "legally imposed on the seller instead of the purchaser" (Division of Taxation, CITT change notice). The Division's worked example applies the bracket rate to the whole amount: a $2.75 million transfer is taxed at 2.5 percent, or $68,750 (Form CITT-1). Transfers on or before November 15, 2025 under contracts fully executed before July 10, 2025 kept the former flat 1 percent. Transactions within six months of each other are treated as a series unless shown otherwise, and related parties are presumed to act in concert (Form CITT-1). The return is due by the last day of the month following the month in which the transfer was completed.

District of Columbia. The District treats a "transfer of an economic interest in real property" as a taxable deed (D.C. Code section 42-1101(3)(A)(iv)). A controlling interest is more than 50 percent of a corporation's voting power or stock value, or more than 50 percent of the capital or profits of a partnership or other unincorporated entity (D.C. Code section 42-1101(11)). The transfer occurs when a controlling interest is conveyed, in one or more transactions, "within any 12-month period" in an entity that, over the prior twelve months, derived more than 50 percent of its gross receipts from District real property or held District real property equal to "80% or more of the value of its entire tangible asset holdings" (D.C. Code section 42-1102.02(a)). Interests transferred through related entities are aggregated (D.C. Code section 42-1102.02(b)).

Illinois. Illinois taxes the transfer of a "beneficial interest," which includes "the indirect interest in real property as reflected by a controlling interest in a real estate entity" (35 ILCS 200/31-5). A controlling interest is more than 50 percent of the fair market value of all ownership or beneficial interests in a real estate entity, and an entity is rebuttably presumed to be a real estate entity if it owns real property worth more than 75 percent of the fair market value of all its assets (35 ILCS 200/31-5). The definitions section contains no lookback period.

Connecticut also taxes controlling interest transfers, under a tax separate from its conveyance tax; the library's article on holding Connecticut real estate in a limited partnership or a limited liability company covers that tax.

The high-threshold jurisdictions

Maryland. Maryland sets two thresholds, one for the entity and one for the interest transferred. The entity must be a "real property entity," one that directly or beneficially owns real property that "constitutes at least 80% of the value of its assets" and "has an aggregate value of at least $1,000,000" (Tax-Property section 12-117(a)(6)(i)). The interest transferred must be a controlling interest, which Maryland defines as "more than 80%" of the total value of a corporation's stock, of the capital and profits of a partnership or limited liability company, or of the beneficial interest in a trust (section 12-117(a)(2)). Recordation tax is then imposed "as if the real property" owned by the entity had been conveyed by a recorded instrument (section 12-117(b)(1)), and the state and county transfer taxes follow on the same terms (section 13-103(b)).

The aggregation rule turns on a plan. A transfer made in more than one transaction is not taxed if it is completed over a period of more than twelve months or is not made under a "plan of transfer," defined as "an intentional plan or program to transfer the controlling interest" (section 12-117(a)(4), (c)(2)). The measure is the consideration paid for the controlling interest, including the entity's mortgage debt and reduced by the consideration allocable to assets other than real property, with the Department's valuation used where the entity cannot establish the consideration (section 12-117(b)(2)). The entity, not the buyer or seller, files the report within 30 days after the final transfer and owes the tax (section 12-117(d), (e)).

Pennsylvania. Pennsylvania reaches entity transfers through the "acquired company" rule. As the Commonwealth Court quoted section 1102-C.5(a) of the Tax Reform Code of 1971 in 2025, "A real estate company is an acquired company upon a change in the ownership interest in the company, however effected," where the change has "the effect of transferring, directly or indirectly," "ninety per cent or more of the total ownership interest in the company," which the court described as a transfer of 90 percent or more within three years (430 Stump Road, LLP v. Commonwealth, No. 502 F.R. 2022 (Pa. Cmwlth. May 15, 2025) (en banc), posted as an unreported opinion). The acquired company files a declaration of acquisition within thirty days (section 1102-C.5(c), as quoted in the same opinion). "Real estate company" is a defined term in section 1101-C: in general, a closely held entity primarily engaged in holding real estate that meets a receipts or asset-value test, and the definition is read before the 90 percent arithmetic. The same en banc opinion held that a statutory exclusion written for transfers of real estate, there the transfer from a trustee to a trust beneficiary, applies to a transfer of a real estate company interest, and that the Department's regulation at 61 Pa. Code section 91.193(c) conflicts with the statute to the extent it says otherwise; the Commonwealth has appealed that ruling to the Supreme Court of Pennsylvania (No. 37 MAP 2025).

Philadelphia. The city's realty transfer tax uses a lower trigger than the Commonwealth's. The City Department of Revenue lists "Transfers of interest in real estate company (where transfer is 75% or more)" among taxable transfers, at a combined rate of 4.578 percent (3.578 percent city and 1 percent Commonwealth) as of October 14, 2026, with the tax due within 30 days after the real estate is acquired. The city's Certificate of Transfer for an acquired real estate company (form 83-T-657) is filed within thirty days and presumes that the company's value is the consideration paid for it. The result is a band of transactions, transfers of at least 75 percent but under 90 percent of a Philadelphia real estate company, that bear the city tax but not the Commonwealth's. The city's published pages do not state the lookback period, which is set by Philadelphia Code chapter 19-1400; it is not safe to assume the Commonwealth's three-year window governs the city test.

Delaware. Delaware works from the other direction. When "beneficial ownership in real estate in this State is transferred through a conveyance or series of conveyances of intangible interests," including mergers and other indirect exchanges, the tax applies as if the property had been conveyed by a recorded document (30 Del. C. section 5401(8)(a)). Pledges of interests as loan collateral and transfers of publicly traded interests are excluded (section 5401(8)(b)). The transfer is not taxed where the beneficial owners before the conveyance "own 80% or more of the beneficial interest in the real estate following" it, and where they keep less than 80 percent, it remains exempt unless, under regulations of the Secretary of Finance, the transfer is "properly characterized as a sale of real property" (section 5401(8)(c)). The statute thus sets an 80 percent retention floor rather than a fixed acquisition threshold and leaves the line beyond it to characterization. The state rate is 2.5 percent where the county or municipality has enacted its full 1.5 percent tax and 3 percent where it has not (section 5402(a)), and the statute apportions the tax equally between grantor and grantee (section 5402).

New Hampshire: no threshold at all

New Hampshire imposes its tax on the "sale, granting and transfer of real estate and any interest therein" (RSA 78-B:1(I)(a)), at 75 cents per $100 of price or consideration, charged to each of the purchaser and the seller (RSA 78-B:1(I)(b); RSA 78-B:4(III)). The definitions make the entity rule explicit and set no percentage: "Transfers of interests in real estate holding companies" are taxable "to the extent of the fair market value of the real estate," and a transfer of an interest in an entity that holds an interest in a real estate holding company, directly or indirectly, is a transfer of an interest in the holding company to the extent of the entity's ownership (RSA 78-B:1-a(V)). A real estate holding company is "an organization which is engaged principally in owning, holding, selling, or leasing real estate and which owns real estate or an interest in real estate within the state" (RSA 78-B:1-a(VI)). A minority interest in such an entity is therefore within the tax on the text. How the "to the extent of" measure is computed for a minority interest is a question the statute does not answer in terms.

Measuring the tax when the entity owns more than land

Washington starts from the true and fair value of the entity's Washington real property, and only when that cannot reasonably be determined does it fall back to appraisal, a purchase price allocation and, last, the county assessed value (RCW 82.45.030(4); WAC 458-61A-101(4)). New York measures by fair market value without reduction for debt and prorates by the percentage transferred (Tax Law section 1401(d); Publication 576). New Jersey uses the consideration where the entity owns only Class 4A property, and where it also owns other real or personal property, the equalized assessed value of the Class 4A property, that is, the assessed value divided by the Director's ratio, multiplied by the ownership percentage transferred, with the tax applying only if that equalized value exceeds $1 million (Form CITT-1). Maryland starts from the consideration paid, counts debt on the entity's real property as consideration and removes the consideration allocable to assets other than real property (Tax-Property section 12-117(b)(2)). Philadelphia presumes the consideration paid for the company is its value (form 83-T-657). Wherever the measure is consideration, the purchase agreement's allocation among real property, personal property and intangibles is a tax document, and a weak allocation invites the jurisdiction's own valuation.

A worked example

An investor buys 60 percent of the membership interests of a limited liability company for cash in one closing. The company owns one office building in each of Washington, New York State outside New York City, New Jersey, Maryland and Pennsylvania outside Philadelphia, and nothing else, and each building is worth more than $1 million.

In Washington, 60 percent is a controlling interest, and the measure is the true and fair value of the Washington building (RCW 82.45.030(2)). In New York, the transfer is a conveyance, and the consideration is 60 percent of the building's fair market value (Tax Law section 1401(d)). In New Jersey, more than 50 percent of the beneficial ownership of Class 4A property has moved, and because the company also owns other property, the tax is 60 percent of the building's equalized assessed value at the bracket rate, if that value exceeds $1 million (N.J.S.A. 54:15C-1; Form CITT-1). In Maryland, 60 percent is not "more than 80%," so no controlling interest has been transferred (Tax-Property section 12-117(a)(2)). In Pennsylvania, assuming the company meets the real estate company definition, 60 percent is short of 90 percent, so the company is not an acquired company. If the buyer returns within the following two years for a further 35 percent, Pennsylvania counts 95 percent within three years, and the company becomes an acquired company. Maryland's result on the second purchase depends on whether the two purchases were made under a plan of transfer and completed within twelve months; if more than twelve months separate them, the combined 95 percent falls outside the tax on the statute's terms (section 12-117(c)(2)).

Had one building been in Philadelphia, the first 60 percent would still fall below the city's 75 percent line, and the second purchase would cross both the city and the Commonwealth lines at once, subject to the city's own lookback. Had one been in New Hampshire, the first purchase would have been taxable without any threshold analysis at all.

Practice notes

The threshold is the last question, not the first. The sound sequence starts with whether the entity is the kind of entity the jurisdiction reaches (Maryland's 80 percent and $1 million test, Pennsylvania's real estate company definition, Illinois's 75 percent presumption, the District's receipts and asset tests), then assembles every transfer of interests within the jurisdiction's aggregation window, including transfers by affiliates and co-investors who may be acting in concert, and only then measures the cumulative percentage. Structures that leave a seller or an unrelated party with a slice large enough to stay below a high threshold are tested against the plan, concert and related-party rules, and a later purchase of the retained slice is tested against the same window. Reporting obligations attach even where no deed is recorded and often fall on the entity itself: Washington's five-day report and Secretary of State report, New York's TP-584 within fifteen days, New Jersey's CITT-1, Maryland's thirty-day entity report and Pennsylvania's and Philadelphia's thirty-day declarations. Liability is assigned by statute, sometimes to the seller, sometimes to the buyer and sometimes to the entity, and New Jersey moved it from buyer to seller in 2025, so the purchase agreement's tax allocation clause is drafted to the current statute in each state. California's local documentary transfer taxes reach entity transfers through the property tax change in ownership rules, which the library's article on documentary transfer tax and entity changes in control covers. G&G State Tax Group provides multistate controlling interest transfer tax analysis for entity acquisitions, restructurings and joint ventures alongside its state and local tax practice.