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Wyoming’s Joint Revenue Committee proposes optional local 1% real estate tax on sales above $1.5M

Voters fill the Industrial Building on Tuesday, Nov. 3, 2020 as the evening rush arrives to cast ballots. (Dan Cepeda, Oil City)

CASPER, Wyo. — The Wyoming Legislature’s Joint Revenue Committee is sponsoring a bill for consideration during the 2022 budget session that would give counties a path to impose an optional real estate transfer tax.

The proposed tax would be an excise tax based on the sale amount of real property. House Bill 35 would impose no tax on real property sales up to $1.5 million. Any sale amount above $1.5 million would see the 1% real estate transfer tax imposed.

“The tax shall be collected based on the full actual consideration paid for the legal title or beneficial interest conveyed including any lien assumed using the best available information,” the proposed legislation states. “For a gift or any deed transferred with nominal consideration or without stated consideration, the tax shall be collected based on the most recent fair market value, as determined by the county assessor, of the real property or interest that is transferred.”

Revenues from the tax would be proportionally distributed to counties and municipalities within the county based on a population-based formula.

In order to implement a real estate tax, counties would need to ask voters in a process similar to how local optional sales taxes questions are put before voters. If voters were to approve the optional real estate tax, the revenue from it would be required to be used “by the county in specific percentages for specific purposes as provided in the proposition submitted” to voters.

The tax could not be imposed unless a majority of voters cast ballots approving a proposition for one.

Counties could put propositions for the optional real estate tax if 5% of voters (based on number of votes cast in last general election) in the county request one via petition. Propositions could also come before voters if county commissioners approve a resolution for one and the governing bodies of at least half the municipalities in the county also approve that resolution.

If voters were to approve a proposition for a real estate transfer tax, the same proposition would come up for renewal every four years unless the tax was otherwise defeated.

The proposed legislation provides a number of exemptions to the optional real estate transfer tax. It wouldn’t apply to:

  • Transfers between spouses, including gifts
  • Transfers between parents and children, including gifts
  • Transfers pursuant to court orders or decrees, including in divorce decrees or property settlements
  • Transfers to or from a trust
  • Transfers between corporations and parent corporations or subsidiaries intended “to make effective any plan of reorganization or adjustment under which a mere change in identity, form or place of organization is effected”
  • Transfers due to sale of property due to delinquent taxes/assessments or transfers pursuant to foreclosure
  • Transfers conducted “through a county certificate of purchase or a sheriff’s deed”
  • Transfers of agricultural land
  • Transfers of real property interests in mineral estates
  • Transfers of real property for industrial purposes
  • Transfers for a lease
  • Transfers for easements
  • Transfers of real property located on the Wind River Reservation “if the grantor or grantee is a member of the Eastern Shoshone or Northern Arapahoe Indian Tribes”
  • Transfers of real property to nonprofit organizations that are exempt from federal income tax and are not private foundations

There are several other exemptions in the current draft of House Bill 35.

Should a local government receive revenue from the proposed optional real estate transfer tax, any state funding it gets in a fiscal year distribution to local governments conducted by Office of State Lands and Investments would be reduced by 50% of the tax revenue that local government received from the optional real estate tax in the same fiscal year.

“It is the intent of the legislature that a similar reduction be included in any similar or subsequent bill establishing a distribution of state funds to local governments for local government funding,” the proposed legislation states. “The amount of the local government distribution that is reduced under this subsection shall revert to the general fund.”

If the bill were to become law, the Wyoming Department of Revenue would be tasked with adopting rules needed to implement the county optional real estate transfer tax by July 1, 2022.