SENATE AMENDED
PRIOR PRINTER'S NOS. 75, 296 PRINTER'S NO. 2024
No. 90 Session of 2001
INTRODUCED BY TANGRETTI, ARGALL, CORRIGAN, MAITLAND, THOMAS,
PETRARCA, McCALL, FREEMAN, CAPPABIANCA, CURRY, HERMAN, MUNDY,
SOLOBAY, YUDICHAK, COSTA, HENNESSEY, MICHLOVIC, SHANER,
YOUNGBLOOD, COLAFELLA, HARHAI, MELIO, SCHULER, WOJNAROSKI,
BUXTON, HALUSKA, MARKOSEK, SCHRODER, WILT, BUNT, GRUCELA,
LEDERER, SANTONI, C. WILLIAMS, BEBKO-JONES, DAILEY,
HUTCHINSON, NICKOL, STABACK, BELARDI, DALEY, JAMES, PETRONE,
STEELMAN, BELFANTI, DeLUCA, JOSEPHS, PISTELLA, STEIL, BISHOP,
DeWEESE, KELLER, PRESTON, STERN, BOYES, EACHUS, LAUGHLIN,
READSHAW, E. Z. TAYLOR, WASHINGTON, SAINATO, GORDNER,
FAIRCHILD, ROEBUCK, ROONEY, TRAVAGLIO, WALKO, TRICH, VANCE,
TRELLO, GEORGE, RUBLEY, FICHTER, FRANKEL, GEIST, ROSS,
WANSACZ, KREBS, B. SMITH, DALLY, NAILOR, ZIMMERMAN, BARD,
M. COHEN, STETLER, ARMSTRONG, PIPPY, BARLEY, TULLI, BASTIAN,
HORSEY, HERSHEY, ORIE, PALLONE, HARPER, L. I. COHEN, BROWNE,
S. MILLER, MACKERETH, SCRIMENTI AND MAHER, JANUARY 23, 2001
SENATOR EARLL, FINANCE, IN SENATE, AS AMENDED, MAY 22, 2001
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," further providing for sales and use tax
11 definitions, for sales and use tax exclusions, for personal
12 income tax definitions and for classes of personal income;
13 providing for a credit against personal income tax; further
14 providing for realty transfer tax definitions, for realty
15 transfer tax exclusions and for penalties for failing to
16 fulfill a historic homesite covenant; and conferring powers
17 and duties on the Pennsylvania Historical and Museum
18 Commission.
19 The General Assembly of the Commonwealth of Pennsylvania
1 hereby enacts as follows:
2 Section 1. Section 201 of the act of March 4, 1971 (P.L.6,
3 No.2), known as the Tax Reform Code of 1971, is amended by
4 adding a clause to read:
5 Section 201. Definitions.--The following words, terms and
6 phrases when used in this Article II shall have the meaning
7 ascribed to them in this section, except where the context
8 clearly indicates a different meaning:
9 * * *
10 (aaa) "Historic homesite." A building which complies with
11 all of the following:
12 (1) The building has been in existence for at least fifty
13 years.
14 (2) The building is divided into no more than four units,
15 one of which is used as the owner's principal residence. The
16 requirements of this clause shall be satisfied if the purchaser
17 of a building has entered into a covenant with the Pennsylvania
18 Historical and Museum Commission to divide the building into no
19 more than four units, one of which will be used as the
20 purchaser's principal residence beginning no later than four
21 months after the date of the transfer of title to the real
22 property.
23 (3) The building:
24 (i) has been designated by Federal or State government as a
25 historic property;
26 (ii) is located in an area designated by Federal or State
27 government as a historic district;
28 (iii) is located in an area designated as a historic
29 district under section 2 of the act of June 13, 1961 (P.L.282,
30 No.167), entitled "An act authorizing counties, cities,
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1 boroughs, incorporated towns and townships to create historic
2 districts within their geographic boundaries; providing for the
3 appointment of Boards of Historical Architectural Review;
4 empowering governing bodies of political subdivisions to protect
5 the distinctive historical character of these districts and to
6 regulate the erection, reconstruction, alteration, restoration,
7 demolition or razing of buildings within the historic
8 districts";
9 (iv) has been designated as a historic property or is
10 located in an area designated as a historic district pursuant to
11 the Historic Preservation Ordinance, Section 14-2007 of the
12 Philadelphia City Code; or
13 (v) has been designated as a historic property or is located
14 in an area designated as a historic district pursuant to Title
15 11 of the Pittsburgh City Code, chapter 1, section 3, as amended
16 by City Council on July 22, 1997.
17 (4) The owner or purchaser of the building has entered into
18 a covenant with the Pennsylvania Historical and Museum
19 Commission providing that:
20 (i) rehabilitation or restoration work, with a total cost of
21 rehabilitation or restoration valued in excess of one thousand
22 dollars ($1,000), will be completed to the satisfaction of the
23 Pennsylvania Historical and Museum Commission in accordance with
24 36 CFR 67.7 (relating to standards for rehabilitation) within
25 five years of the date the covenant was entered into with the
26 Pennsylvania Historical and Museum Commission; and
27 (ii) the building:
28 (A) has been or will be occupied as the principal residence
29 of the owner or, FOR GOOD CAUSE CONSENTED TO BY THE PENNSYLVANIA <--
30 HISTORICAL AND MUSEUM COMMISSION, OF A successor in interest for
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1 at least five consecutive years, including the date the covenant
2 was entered into with the Pennsylvania Historical and Museum
3 Commission; or
4 (B) will be occupied as the principal residence of the
5 purchaser or, FOR GOOD CAUSE CONSENTED TO BY THE PENNSYLVANIA <--
6 HISTORICAL AND MUSEUM COMMISSION, OF A successor in interest for
7 at least five consecutive years, beginning no later than four
8 months after the date of transfer of title to the real property.
9 (bbb) "Cost of rehabilitation or restoration." Costs
10 attributed to the rehabilitation or restoration of a historic
11 homesite, including historic decorative elements; upgrading of
12 the structural, mechanical, electrical and plumbing systems to
13 applicable code; and alterations associated with the conversion
14 of the building to residential use. The term shall not include
15 costs attributable to the acquisition of the real property; the
16 enlargement of an existing building; landscaping, driveways and
17 other site features; outbuildings or garages; and personal labor
18 performed by the owner.
19 Section 2. Section 204 of the act is amended by adding a
20 clause to read:
21 Section 204. Exclusions from Tax.--The tax imposed by
22 section 202 shall not be imposed upon
23 * * *
24 (61) The sale at retail or use of tangible personal property
25 or services which are costs of rehabilitation or restoration of
26 a historic homesite. The purchaser shall furnish to the vendor a
27 certificate substantially in the form as the Pennsylvania
28 Historical and Museum Commission, in conjunction with the
29 department, shall prescribe stating that the sale is exempt from
30 tax pursuant to this clause.
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1 Section 3. Section 301 of the act is amended by adding a
2 clause to read:
3 Section 301. Definitions.--The following words, terms and
4 phrases when used in this article shall have the meaning
5 ascribed to them in this section except where the context
6 clearly indicates a different meaning. Unless specifically
7 provided otherwise, any reference in this article to the
8 Internal Revenue Code shall include the Internal Revenue Code of
9 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended to
10 January 1, 1997:
11 * * *
12 (i.3) "Historic homesite" means a historic homesite as
13 defined in section 201(aaa).
14 Section 4. Section 303(a)(3) of the act is amended by adding
15 a subparagraph to read:
16 Section 303. Classes of Income.--(a) The classes of income
17 referred to above are as follows:
18 * * *
19 (3) Net gains or income from disposition of property. Net
20 gains or net income, less net losses, derived from the sale,
21 exchange or other disposition of property, including real
22 property, tangible personal property, intangible personal
23 property or obligations issued on or after the effective date of
24 this amendatory act by the Commonwealth; any public authority,
25 commission, board or other agency created by the Commonwealth;
26 any political subdivision of the Commonwealth or any public
27 authority created by any such political subdivision; or by the
28 Federal Government as determined in accordance with accepted
29 accounting principles and practices. For the purpose of this
30 article:
20010H0090B2024 - 5 -
1 * * *
2 (viii) The term "net gains or income" shall not include the
3 net gain on the sale of a historic homesite. No later than the
4 date of transfer of title to the real property, the purchaser
5 shall provide a copy of the covenant with the Pennsylvania
6 Historical and Museum Commission to the seller.
7 * * *
8 Section 5. The act is amended by adding a section to read:
9 Section 314.1. Historic Homesite Rehabilitation Credit.--(a)
10 An individual shall be allowed a credit against the tax
11 otherwise due under this article for the rehabilitation or
12 restoration of a historic homesite.
13 (b) Subject to subsection (c), the credit authorized under
14 this section shall be twenty per cent of the amount expended by
15 the individual during the taxable year on tangible personal
16 property or services that qualify for a sales and use tax
17 exclusion under section 204(61) as certified by the Pennsylvania
18 Historical and Museum Commission.
19 (c) The cumulative credit for rehabilitation or restoration
20 of a historic homesite shall not exceed six thousand dollars
21 ($6,000), regardless of the number of years over which the
22 qualifying expenditures take place.
23 (d) If the taxpayer cannot use the entire amount of the
24 historic homesite rehabilitation credit for the taxable year in
25 which the expenditures are first made, then the excess may be
26 carried over to succeeding taxable years. Each time that the
27 historic homesite rehabilitation credit is carried over to a
28 succeeding taxable year, it shall be reduced by the amount that
29 was used as a credit during the immediately preceding taxable
30 year. The credit may be carried over and applied to succeeding
20010H0090B2024 - 6 -
1 taxable years for no more than five taxable years following the
2 first taxable year for which the taxpayer was entitled to claim
3 the credit.
4 Section 6. Section 1101-C of the act is amended by adding a
5 definition to read:
6 Section 1101-C. Definitions.--The following words when used
7 in this article shall have the meanings ascribed to them in this
8 section:
9 * * *
10 "Historic homesite." A historic homesite as defined in
11 section 201(aaa).
12 * * *
13 Section 7. Section 1102-C.3 of the act, amended or added
14 July 2, 1986 (P.L.318, No.77), June 16, 1994 (P.L.279, No.48)
15 and May 7, 1997 (P.L.85, No.7), is amended to read:
16 Section 1102-C.3. Excluded Transactions.--The tax imposed by
17 section 1102-C shall not be imposed upon:
18 (1) A transfer to the Commonwealth or to any of its
19 instrumentalities, agencies or political subdivisions by gift,
20 dedication or deed in lieu of condemnation or deed of
21 confirmation in connection with condemnation proceedings, or a
22 reconveyance by the condemning body of the property condemned to
23 the owner of record at the time of condemnation, which
24 reconveyance may include property line adjustments provided said
25 reconveyance is made within one year from the date of
26 condemnation.
27 (2) A document which the Commonwealth is prohibited from
28 taxing under the Constitution or statutes of the United States.
29 (3) A conveyance to a municipality, township, school
30 district or county pursuant to acquisition by the municipality,
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1 township, school district or county of a tax delinquent property
2 at sheriff sale or tax claim bureau sale.
3 (4) A transfer for no or nominal actual consideration which
4 corrects or confirms a transfer previously recorded, but which
5 does not extend or limit existing record legal title or
6 interest.
7 (5) A transfer of division in kind for no or nominal actual
8 consideration of property passed by testate or intestate
9 succession and held by cotenants; however, if any of the parties
10 take shares greater in value than their undivided interest, tax
11 is due on the excess.
12 (6) A transfer between husband and wife, between persons who
13 were previously husband and wife who have since been divorced,
14 provided the property or interest therein subject to such
15 transfer was acquired by the husband and wife or husband or wife
16 prior to the granting of the final decree in divorce, between
17 parent and child or the spouse of such child, between brother or
18 sister or spouse of a brother or sister and brother or sister or
19 the spouse of a brother or sister and between a grandparent and
20 grandchild or the spouse of such grandchild, except that a
21 subsequent transfer by the grantee within one year shall be
22 subject to tax as if the grantor were making such transfer.
23 (7) A transfer for no or nominal actual consideration of
24 property passing by testate or intestate succession from a
25 personal representative of a decedent to the decedent's devisee
26 or heir.
27 (8) A transfer for no or nominal actual consideration to a
28 trustee of an ordinary trust where the transfer of the same
29 property would be exempt if the transfer was made directly from
30 the grantor to all of the possible beneficiaries that are
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1 entitled to receive the property or proceeds from the sale of
2 the property under the trust, whether or not such beneficiaries
3 are contingent or specifically named. A trust clause which
4 identifies the contingent beneficiaries by reference to the
5 heirs of the trust settlor as determined by the laws of the
6 intestate succession shall not disqualify a transfer from the
7 exclusion provided by this clause. No such exemption shall be
8 granted unless the recorder of deeds is presented with a copy of
9 the trust instrument that clearly identifies the grantor and all
10 possible beneficiaries.
11 (8.1) A transfer for no or nominal actual consideration to a
12 trustee of a living trust from the settlor of the living trust.
13 No such exemption shall be granted unless the recorder of deeds
14 is presented with a copy of the living trust instrument.
15 (9) A transfer for no or nominal actual consideration from a
16 trustee of an ordinary trust to a specifically named beneficiary
17 that is entitled to receive the property under the recorded
18 trust instrument or to a contingent beneficiary where the
19 transfer of the same property would be exempt if the transfer
20 was made by the grantor of the property into the trust to that
21 beneficiary. However, any transfer of real estate from a living
22 trust during the settlor's lifetime shall be considered for the
23 purposes of this article as if such transfer were made directly
24 from the settlor to the grantee.
25 (9.1) A transfer for no or nominal actual consideration from
26 a trustee of a living trust after the death of the settlor of
27 the trust or from a trustee of a trust created pursuant to the
28 will of a decedent to a beneficiary to whom the property is
29 devised or bequeathed.
30 (9.2) A transfer for no or nominal actual consideration from
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1 the trustee of a living trust to the settlor of the living trust
2 if such property was originally conveyed to the trustee by the
3 settlor.
4 (10) A transfer for no or nominal actual consideration from
5 trustee to successor trustee.
6 (11) A transfer:
7 (i) for no or nominal actual consideration between principal
8 and agent or straw party; or
9 (ii) from or to an agent or straw party where, if the agent
10 or straw party were his principal, no tax would be imposed under
11 this article.
12 Where the document by which title is acquired by a grantee or
13 statement of value fails to set forth that the property was
14 acquired by the grantee from, or for the benefit of, his
15 principal, there is a rebuttable presumption that the property
16 is the property of the grantee in his individual capacity if the
17 grantee claims an exemption from taxation under this clause.
18 (12) A transfer made pursuant to the statutory merger or
19 consolidation of a corporation or statutory division of a
20 nonprofit corporation, except where the department reasonably
21 determines that the primary intent for such merger,
22 consolidation or division is avoidance of the tax imposed by
23 this article.
24 (13) A transfer from a corporation or association of real
25 estate held of record in the name of the corporation or
26 association where the grantee owns stock of the corporation or
27 an interest in the association in the same proportion as his
28 interest in or ownership of the real estate being conveyed and
29 where the stock of the corporation or the interest in the
30 association has been held by the grantee for more than two
20010H0090B2024 - 10 -
1 years.
2 (14) A transfer from a nonprofit industrial development
3 agency or authority to a grantee of property conveyed by the
4 grantee to that agency or authority as security for a debt of
5 the grantee or a transfer to a nonprofit industrial development
6 agency or authority.
7 (15) A transfer from a nonprofit industrial development
8 agency or authority to a grantee purchasing directly from it,
9 but only if:
10 (i) the grantee shall directly use such real estate for the
11 primary purpose of manufacturing, fabricating, compounding,
12 processing, publishing, research and development,
13 transportation, energy conversion, energy production, pollution
14 control, warehousing or agriculture; and
15 (ii) the agency or authority has the full ownership interest
16 in the real estate transferred.
17 (16) A transfer by a mortgagor to the holder of a bona fide
18 mortgage in default in lieu of a foreclosure or a transfer
19 pursuant to a judicial sale in which the successful bidder is
20 the bona fide holder of a mortgage, unless the holder assigns
21 the bid to another person.
22 (17) Any transfer between religious organizations or other
23 bodies or persons holding title for a religious organization if
24 such real estate is not being or has not been used by such
25 transferor for commercial purposes.
26 (18) A transfer to a conservancy which possesses a tax-
27 exempt status pursuant to section 501(c)(3) of the Internal
28 Revenue Code of 1954 (68A Stat. 3, 26 U.S.C. § 501(c)(3)) and
29 which has as its primary purpose preservation of land for
30 historic, recreational, scenic, agricultural or open-space
20010H0090B2024 - 11 -
1 opportunities; or a transfer from such a conservancy to the
2 United States, the Commonwealth or to any of their
3 instrumentalities, agencies or political subdivisions; or any
4 transfer from such a conservancy where the real estate is
5 encumbered by a perpetual agricultural conservation easement as
6 defined by the act of June 30, 1981 (P.L.128, No.43), known as
7 the "Agricultural Area Security Law," and such conservancy has
8 owned the real estate for at least two years immediately prior
9 to the transfer.
10 (19) A transfer of real estate devoted to the business of
11 agriculture to a family farm corporation by a member of the same
12 family which directly owns at least seventy-five per cent of
13 each class of the stock thereof.
14 (19.1) A transfer of real estate devoted to the business of
15 agriculture to a family farm partnership by a member of the same
16 family, which family directly owns at least seventy-five per
17 cent of the interests in the partnership.
18 (20) A transfer between members of the same family of an
19 ownership interest in a real estate company, family farm
20 corporation or family farm partnership which owns real estate.
21 (21) A transaction wherein the tax due is one dollar ($1) or
22 less.
23 (22) Leases for the production or extraction of coal, oil,
24 natural gas or minerals and assignments thereof.
25 In order to exercise any exclusion provided in this section, the
26 true, full and complete value of the transfer shall be shown on
27 the statement of value. For leases of coal, oil, natural gas or
28 minerals, the statement of value may be limited to an
29 explanation of the reason such document is not subject to tax
30 under this article.
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1 (23) A transfer of a historic homesite. No later than the
2 date of transfer of title to the real property, the purchaser
3 shall provide a copy of the covenant with the Pennsylvania
4 Historical and Museum Commission to the seller.
5 Section 8. The act is amended by adding a section to read:
6 Section 3003.14. Failure to Fulfill Historic Homesite
7 Covenant.--(a) The Pennsylvania Historical and Museum
8 Commission shall notify the department when an individual who
9 has entered into a covenant to rehabilitate or restore a
10 historic homesite under section 201(aaa), 301(i.3) or 1101-C
11 fails to abide by the terms of the covenant.
12 (b) Upon notification by the Pennsylvania Historical and
13 Museum Commission that the individual has failed to abide by the
14 terms of the covenant, the department shall levy a penalty
15 against that individual equal to two hundred per cent of the tax
16 benefits granted under sections 204(61), 303(a)(3)(viii), 314.1
17 and 1102-C.3 with respect to the historic homesite to which the
18 covenant applied.
19 (c) The penalty provided by subsection (b), or any portion
20 thereof, may be abated if the failure to abide by the terms of
21 the covenant is justified by reason of change in employment,
22 health or, to the extent provided in regulation, unforeseen
23 circumstances. The department and the Pennsylvania Historical
24 and Museum Commission shall promulgate regulations to implement
25 this subsection.
26 Section 9. This act shall apply to covenants with the
27 Pennsylvania Historical and Museum Commission which are entered
28 into after June 30, 2001.
29 Section 10. This act shall be known and may be cited as the
30 Historic Home and Neighborhood Preservation Act.
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1 Section 11. This act shall take effect July 1, 2001, or
2 immediately, whichever is later.
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