NAC375.150. Examples of methods of determining value or tax base.

The following examples are given to illustrate methods of determining value or the tax base on which to compute any tax imposed by chapter 375 of NRS:

     1. “A,” the owner of a residence, sold the residence for $250,000. The tax is based on $250,000, the amount paid for the property.

     2. “A,” the owner of certain real estate, sold it to “B” for $144,000. “B” paid the amount of $25,000 in cash, leaving a balance of $119,000, and “A” gave “B” a deed to the property. The tax is computed on $144,000, the amount paid or to be paid.

     3. The holder of a trust deed in the amount of $120,000 foreclosed upon the property securing the deed. At the foreclosure sale, because of taxes and additional expenses incurred, the trustee bid $122,500, and a trustee’s deed was issued to the beneficiary. The beneficiary then accepted a mortgage in the amount of $125,000 as consideration for the retransfer of the property to the former owner. The tax on the trustee’s deed should be computed on the amount bid for the property plus any costs, in this example $122,500. The deed from the beneficiary to the former owner of the property is a conveyance of realty sold, and the tax should be computed upon the amount paid, namely $125,000.

     4. For a full purchase price of $500,000, “A” conveys to “B” land on which there is an encumbrance of $410,000 at the time of sale. “A” signs a contract agreeing to pay off the encumbrance at a later date. The deed of conveyance from “A” to “B” is subject to tax on the full purchase price of $500,000. The fact that the seller retained a contractual obligation on the property does not diminish the amount that “B” will pay, $500,000.

     5. “A,” the owner of certain real estate, sold it to “B” for a consideration of $240,000. “B” paid the amount of $125,000 in cash, leaving a balance due of $115,000. “A” accepted bonds of the Home Owners’ Loan Corporation for the balance of $115,000 and gave “B” a deed to the property. The tax is based on the total purchase price of $240,000, the $125,000 in cash and the $115,000 value of the bonds.

     6. Two corporations that do not have identical ownership exchange properties worth $450,000 each. Each transfer is taxable on the $450,000 value. Each corporation is receiving something of value in exchange for the property it is transferring.

     7. To qualify for a loan to refinance their home, a married couple adds the husband’s parents to the title, with the married couple and the husband’s parents all as joint tenants. The value of the property is $145,000. Because the transfer to the husband’s parents from the wife is not exempt from the tax and the joint tenants each have a right to the whole property, the transfer is taxable on the $145,000 value.

     8. A couple buys a home from the Veteran’s Administration for $97,142.36. The transfer is taxable on the amount of purchase, $97,142.36.

     9. A university foundation receives property valued at $1,000,000. The transfer is exempt from taxation pursuant to subsection 15 of NRS 375.090. The university foundation sells the property to another party in a transaction that is not exempt pursuant to NRS 375.090 for $750,000. The second transfer is taxable on the amount of purchase, $750,000.

     10. A corporation owns property valued at $180,000. To refinance the property, the corporation transfers the property to one of its shareholders pursuant to the requirements of the lender. The transfer is taxable on the value of the property, $180,000.

     11. “A” owns property worth $50,000. “B” owns property worth $75,000. “A” and “B” form a limited-liability company and are the only two members. “A” and “B” transfer their properties to the limited-liability company. Each transfer is taxable for the value of the properties, $50,000 and $75,000, respectively.

     12. “A” and “B,” who are not married and not related within the first degree of consanguinity, own two identical properties, each worth $50,000, as joint tenants. “A” and “B” wish to transfer their interest in each property to the other so that “A” owns one property as the sole owner and “B” owns the other property as the sole owner. Because “A” and “B” are giving up their respective rights in the other parcel, the transfers are made with consideration and thus each transfer is taxable for the $50,000 value. If “A” and “B” held title to each property in 50 percent fractional interests, each transfer would be taxable for $25,000.

     13. “A” and “B” are joint tenants of a 10-acre parcel that is worth $150,000. “A” and “B” are not married and are not related within the first degree of consanguinity. They wish to partition the property with each receiving a 5-acre parcel in his own name. The transfer of each 5-acre parcel is taxable at a $75,000 value. If they each owned a 50 percent fractional interest in the parcel, the transfer of each 5-acre parcel would be exempt from taxation, but if 6 acres were transferred to “A” and 4 acres were transferred to “B,” the transfer to “A” would be taxed on the value of 1 acre, $15,000.

     14. A partnership owns real property worth $100,000. There is a mortgage on the property, and the partnership wishes to refinance the mortgage. As a condition of refinancing, the lender requires the property to be held in title by only one partner. The transfer from the partnership to the single partner is taxable on the entire $100,000 value. Once the refinancing is complete, any transfer of title back to the partnership is also taxable on the entire $100,000 value.

     15. “A” and “B” own adjoining lots. “A” agrees to buy part of “B’s” lot for $1,500,000. To expedite the mapping requirements, “B” transfers 100 percent of his lot to “A,” but retains a contractual obligation from “A” that after all mapping and adjustments to the legal description of the lot are complete, “A” will transfer back to “B” the property outside the purchased area. The first transfer is taxable on the $1,500,000 amount. Because the second transfer is made without stated consideration, the transfer back to “B” of the excess area is taxable based on the fair market value of that area.

     [Tax Comm’n, Real Property Transfer Tax Ruling No. 2, eff. 1-1-68]—(A by R181-01, 5-13-2002; A by Dep’t of Taxation by R224-03, 4-30-2004)