Actually, effective August 1, 2016, for Cuyahoga County, there is a new Page 2 to the statewide Real Property Conveyance Fee Statement of Value and Receipt (Form DTE 100). Form DTE 100 is the form that must accompany all real estate transfers in Ohio (unless exempt from conveyance fees pursuant to Ohio Revised Code Section 319.54 (G)(3)). Entitled the “Sales Verification Questionnaire”, this form must be signed and completed by either the seller or the buyer. The Conveyance Fee Statement (the first page of Form DTE 100 is required to be completed/signed by the grantee or a representative of the grantee). By signing this questionnaire, the party completing same must acknowledge “that the information provided to the Cuyahoga County Fiscal Office regarding [the] real estate transfer is truthful and completed to the best of their knowledge.”
The newly revised Form DTE 100 can be obtained at the following site:
Basically, the Sales Verification Questionnaire (aka “new Page 2 of Form DTE 100) asks the following questions, extracted from the form:
- Were there any special conditions affecting the sale?
O Sale between family members.
O Sale between two affiliated businesses.
O Auction Sale
O Forced Sale or Sheriff’s Sale
O Sale involved a government agency or public utility.
O Buyer is a religious or charitable organization.
O Land contract or contract for deed.
O Sale involves only a partial interest.
O Sale includes trade or exchange of properties.
O Sale by judicial order
O NONE OF THE ABOVE
- What was the use of the property at time of sale?
O Single Family Residence
O Vacant Lot
O Multifamily Residence
O Apartment Building
O Industrial O Other
- Was property rented/leased at time of sale? O Yes O No
- Did sale price include an existing business? O Yes O No
- Was any personal property, such as furniture, equipment, machinery, livestock, business inventory, included in the sale price? O Yes O No
If yes, describe:
Est. Value of Personal Prop. Incl. in Sale: $
- Have there been any recent changes to the property? O No O Demolition O Addition(s) O Renovations
When was work completed?
Estimated Cost of Work Done: $
- Does the buyer hold title to any adjoining property? O Yes O No
- Was an appraisal done on the property? O Yes O No
- Were any delinquent taxes assumed by the purchaser?
O Yes – Amount: __________
- How was the property marketed? (Check all that apply)
O Listed with Real Estate Agent O Displayed “For Sale” sign
O Advertised in Newspaper O Word of Mouth
Why the need for this new form? The form itself answers this question; “All information obtained through this questionnaire will be used to determine whether or not this transaction is an arm’s-length, market based sale.”
What is an arm’s-length sale? In Ohio, relevant case law has established that “three factors are relevant to deciding whether a transaction occurred at arm’s-length: whether the sale was voluntary; i.e., without compulsion or duress, whether the sale [took] place in an open market, and whether the buyer and seller act[ed] in their own self-interest.”
Why does it matter if your transaction is an arm’s-length, market based sale?Basically, it has to do with establishing the value of real property which in turn determines the amount of real estate taxes required to be paid. The general rule with regard to determining value of real property (in order to calculate real estate taxes) is that the purchase price at a recent (within three years) arm’s-length sale of the property between a willing buyer and willing seller is usually dispositive. (Note that “usually” is italicized above because pursuant to Ohio Am. Sub H.B. 487 (H.B. 487) signed into law on June 11, 2012, the revised statutory language of R.C. 5713.03 now provides that an auditormay (vs. shall consider the price of a recent sale as value). Nevertheless, auditors usually consider the price of a recent, arm’s-length sale as value because what better indication of value is there than the price someone is willing to pay and actually pays for the property?
If not arm’s-length, however, auditors will usually not establish value based on the price. Examples of non-arm’s-length sales are: sales between family members, sale between two affiliated businesses, auction sales and other sales of the types described on the new Sale Verification Questionnaire.
Is this new questionnaire good or bad for taxpayers? While most of the information called for on the new form seems likely to result in increased valuations for the taxpayer, answers to questions 4 and 5 might help prove that valuation (and accordingly taxes) should be lowered.
For example, if the purchase price of a $500,000 commercial property includes personal property valued at $100,000, the valuation of the real property should be $400,000. In such a case, however, consistency is the key. Appraisals are recommended to establish the value of significant personal property purchased along with real property, purchase agreements should specifically allocate the purchase price between real and personal property, and Section 7 (d)-(f) of the Real Property Conveyance Fee Statement (page one of Form DTE 100) should appropriately provide separate values for personal and real property, based upon the appraisal and agreed allocation.
Will the Sales Verification Questionnaire be required in other counties in Ohio? Good question. Counties researched thus far have not followed suit, but are expected to. I have posed this question to the Ohio Department of Taxation, and will supplement this article upon receipt of their answer.