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The Philadelphia Business Journal's Natale Kostelni interviewed Buchanan Ingersoll & Rooney Real Estate Shareholder Lafe Metz for a March 28 article on the "89-11" realty tax tactic and state's response.

According to Kostelni, the 89-11 tactic is used by buyers and sellers of downtown office buildings "to skirt paying the realty transfer tax." She explains:

    A buyer and seller can transfer an 89 percent interest of a partnership or business entity  that owns real estate at the day of a closing and then transfer the remaining 11 percent of  the partnership interest three years and a day later and forgo paying any of the tax. This  bends a rule holding that once 90 percent or more of a property-owning partnership is  sold, the transaction is treated as if the property were entirely sold and triggers the levy.


The state, unhappy with the loophole, drafted proposals to change realty transfer tax. Feedback from the Pennsylvania Bar Association, among others, led them to drop the issue for the time being.

For the full text of Kostelni's article, visit the Philadelphia Business Journal.