Commercial Property Sales Loophole Costs Small Business Owners Thousands
When Palmer Square, LLC recently wanted to sell their apartment building at 4121 Palmer Park Circle East in Columbus, they went through all the usual hoops that most homeowners are familiar with: they executed a purchase contract with the buyer, Manhattan Real Estate Partners, LLC, they ordered an inspection, and they obtained title insurance.
But selling the property outright would have cost $65,000 in conveyance fee taxes, and annual property tax would bump up an additional $309,000 dollars per year, with the property now valued at the agreed to purchase price of $35.25 million instead of the auditor’s value of $24.5 million. So instead, Palmer Square formed Palmer House Borrower, LLC. That new business received the property at 4121 Palmer Park Circle and its mortgage. Then they technically sold the business, and not the property. Conveyance tax due to Franklin County: $0.
Palmer Square is one of hundreds of such property deals taking place throughout the state of Ohio every year, and they are legal.