Veterans Orgs Exempt from Realty Tax in PA

(By Digital First Media staff Posted 01/11/18)
HARRISBURG >> Nationally recognized veterans organizations are now exempt from the Realty Transfer Tax, under a provision sponsored by state Sen. John Rafferty, R-44th Dist., and state Sen. Mario Scavello, R-40th Dist..

Prior to the change, veterans organizations wishing to transfer property from the local home association to the post were not excluded from the 2-percent realty transfer tax despite their tax-exempt status. The Realty Transfer Tax exemption was introduced by Rafferty and Scavello as Senate Bill 430, which was amended into Act 43 of 2017, the Tax Code bill.

The change was made necessary as the result of a 1998 state Supreme Court ruling that prompted American Legion home associations which did not have a liquor license but wished to obtain one to apply as an incorporated unit of a national veterans organization. The associations were advised to transfer all other realty and assets to the post to insulate the post and its assets from liability while still affording them the opportunity to have social or associate members who can contribute to the post’s financial success.

The new law exempts veterans organizations from the Realty Transfer Tax during such necessary transactions.

“For organizations serving Pennsylvania’s veterans, covering costs is a constant challenge. The last thing government should be doing is imposing burdens that divert funds away from services for veterans,” Scavello said. “Other tax-exempt entities are excluded from the Realty Transfer Tax, and now organizations that serve veterans will receive the same treatment.”

“Implementation of this tax exemption will be especially beneficial to the many smaller social clubs affiliated with veterans organizations. For them, the Realty Transfer Tax is a costly impediment to performing a simple transfer of real estate,” said Rafferty. “These organizations tend to operate on very thin financial margins, and now they can spend more of their funds on matters important to veterans, rather than this on tax bill.”

Despite the change in tax status, the home association is still dependent on the national veterans organization post, and the post continues to have the authority to disband the home association at any time.

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