Beware of hidden transfer taxes

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(FORTUNE Small Business) -- Dear FSB: How do I move properties in Pennsylvania that are in my husband's and my name into our Pennsylvania LLC? The county recorder of deeds said it's the same as any other real estate transfer.

- Mari Kehner, N.J.

Dear Mari: Why move them in the first place? You could be hit with a whopping transfer tax, warns Stephen Foxman, an attorney in the business division of Eckert Seamans in Philadelphia and chairman of the Philadelphia Bar Association's Business Law Section.

"If you don't have a good reason, don't move it," he says.

In Pennsylvania, that tax is generally 2%, varying depending on where the property is located, says Michael Goss, an attorney with Zarwin Baum DeVito Kaplan Schaer Toddy, P.C. in Philadelphia and a member of the Real Property Executive Committee of the Philadelphia Bar Association.

If you do choose to transfer it, it just takes filing a simple deed, says Goss.

"Nothing stops you from transferring to anybody you want," says Foxman, "but beware of that transfer tax, it could be substantial."

In Pennsylvania, transfer taxes apply to virtually all transfers except those between immediate relatives - and "an LLC is not your family," he says.

The only benefit might be the limited liability protection you would gain to to protect against someone getting hurt on the property. But a better route to that protection would be buying an insurance policy.

"It'd probably be cheaper than that transfer tax," says Foxman.