We entered a purchase-and-assumption agreement with the Resolution Trust Corporation, acting as receiver for a failed savings bank, giving us options to acquire the failed bank's leased and owned New York real estate. Since the RTC is a federal agency handling a bank failure, are its transfers of that real estate to us exempt from New York's Real Property Transfer Gains Tax?

Plain-English summary

This tax no longer exists. New York's Real Property Transfer Gains Tax (former Article 31-B of the Tax Law) was a 10% tax on the GAIN from transferring New York real property where consideration was $1 million or more. It was repealed for any transfer occurring on or after June 15, 1996. This 1991 opinion is preserved here for historical and research value, not as current law.

KeyCorp entered a Purchase and Assumption Agreement with the Resolution Trust Corporation (RTC) -- the federal agency created to handle the savings-and-loan crisis of the late 1980s and early 1990s -- acting as receiver for the failed Empire Federal Savings Bank of America. Under federal banking law (Section 11(d)(2)(G) of the FDI Act), the RTC as receiver had stepped into Empire's shoes with all the rights, titles, powers, and privileges of the failed institution and its stockholders and depositors. The agreement gave KeyCorp exclusive options: a 120-day window (from Empire's closing) to accept assignment of any or all of Empire's New York real property leases, and a separate 60-day window (starting once an appraisal was received) to purchase real property Empire had owned outright. KeyCorp would pay rent and cover operating costs to RTC during these option periods while deciding whether to exercise them.

The Department worked through two layers. First, federal law makes clear the RTC, acting as receiver, is legally the transferor of all of a failed institution's assets, including every category of real property interest the gains tax's own definition reaches -- fee interests, leaseholds, and options (former § 1440.4). Second, and decisively, New York's gains tax statute contains its own specific exemption for transfers where the TRANSFEROR is the United States or any of its agencies or instrumentalities (former § 1443.3(b)). Federal law expressly designates the RTC as just such a federal agency and instrumentality, and separately confirms the RTC is generally exempt from state and local taxation (with a narrow carve-out for real estate taxes on property the RTC itself holds and is taxed on like any other owner -- not relevant here, since RTC was the seller, not a taxed current owner). Combining these authorities, the Department concluded that ANY transfer of real property interests by the RTC, acting as Empire's receiver, to KeyCorp -- whether leasehold assignments or fee purchases -- was exempt from the gains tax, regardless of the dollar value involved. The Department flagged, however, that it wasn't addressing a separate question: whether Empire's OWN original transfer of its real property INTO the RTC's receivership might itself have required a gains-tax filing.

What this means for you

Banks and acquirers purchasing failed-institution assets from federal receivers

Under this now-repealed tax, acquiring real estate or leasehold interests from the RTC (or, by the same logic, the FDIC or another federal banking regulator/agency acting as receiver) wasn't subject to the gains tax at all, because the FEDERAL AGENCY itself was the transferor -- a categorical exemption that applied regardless of transaction size.

Banking and real estate attorneys structuring failed-bank asset acquisitions

This opinion is a clean confirmation that the federal-instrumentality exemption (former § 1443.3(b)) reached the RTC specifically, tracing through the specific federal statutes (12 U.S.C. §§ 1441a, 1821) that established the RTC's status and its own state-tax immunity -- useful groundwork if researching any similar federal-receiver transaction from this era.

Accountants tracking gains-tax exposure in bank-failure asset acquisitions

The opinion's explicit carve-out -- that it does NOT address whether the FAILED BANK's own transfer of assets INTO receivership triggered a separate gains-tax filing -- is a reminder that a two-step transaction (institution-to-receiver, then receiver-to-acquirer) can raise independent tax questions at each step.

Common questions

Q: Does this federal-instrumentality exemption still matter today?
A: Not under this specific tax -- it was repealed for transfers on or after June 15, 1996, and the RTC itself was wound down in the late 1990s after the savings-and-loan crisis resolved. Current New York real estate taxes have their own separate rules for transfers involving federal agencies.

Q: Why didn't the RTC's general state-tax exemption (12 U.S.C. § 1441a(g)) fully resolve the question on its own?
A: Because that federal exemption has its own carve-out for real estate taxes on property the RTC itself holds and owns -- so the Department also needed to confirm New York's OWN gains-tax statute independently exempted transfers where a federal agency was the TRANSFEROR, which former § 1443.3(b) did.

Q: Would KeyCorp's later resale of any acquired property have been exempt too?
A: No -- this exemption applies to the RTC's OWN transfer as transferor. Once KeyCorp owned the property, a later resale by KeyCorp would be analyzed under the ordinary gains-tax rules applicable to any private transferor.

Q: Can another acquirer in a similar failed-bank purchase-and-assumption deal rely on this exact ruling?
A: No, apart from the repeal -- an Advisory Opinion binds the Department only as to the petitioner and facts presented, though the underlying federal-instrumentality exemption was a generally applicable statutory rule during the tax's lifespan, not something unique to KeyCorp.

Citations and references

Statutes and regulations:

• former Tax Law § 1440.4 (defines "interest" in real property broadly: fee title, leasehold interests, beneficial interests, encumbrances, development-rights transfers, and options or contracts to purchase)
• former Tax Law § 1443.3(b) (exemption from the gains tax where the transferor is the United States of America or any of its agencies or instrumentalities, or an international organization like the United Nations)
• 12 U.S.C. § 1441a(b)(1) (the Resolution Trust Corporation is an agency and instrumentality of the United States)
• 12 U.S.C. § 1441a(b)(4) (the RTC has the same powers and rights as the FDIC when acting as receiver of an insured depository institution)
• 12 U.S.C. § 1441a(g) (the RTC's capital, reserves, surplus, and assets are exempt from state, municipal, and local taxation, except real estate taxes on property the RTC holds, taxed like similar property held by other persons)
• 12 U.S.C. § 1821(d) (the RTC as receiver, by operation of law, succeeds to all rights, titles, powers, and privileges of the failed institution and its stockholders, members, account holders, depositors, officers, and directors, with respect to the institution and its assets)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/real_prop_tran_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/real_property/a91_2r.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (2) R
Real Property
Transfer Gains Tax
March 11, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M901207E

On December 7, 1990, a Petition for Advisory Opinion was received from KeyCorp, One
KeyCorp Plaza, PO Box 88, Albany, New York 12201-0088.
The issue raised by Petitioner, KeyCorp, is whether transfers of interests in New York real
property, by or through the Resolution Trust Corporation (hereinafter "RTC") are exempt from the
payment of the Real Property Transfer Gains Tax (the "gains tax") pursuant to Section 1443(3)(b)
of the Tax Law.
Petitioner entered into a Purchase and Assumption Agreement (the "Agreement") with RTC,
Receiver of Empire Federal Savings Bank of America (hereinafter "Empire"), pursuant to Section
ll(d)(2)(G) of the FDI Act. (12 U.S.C. Section 1821(d)(2)(G)).
Pursuant to the Agreement, Petitioner was granted exclusive options to accept assignment
from RTC of any or all lease agreements for New York real property leased by Empire. The option
period is for 120 days from the date of the closing of business for Empire.
Pursuant to the Agreement, RTC also granted Petitioner exclusive options to purchase New
York real property owned by Empire. The option period is for 60 days from the date of receipt of an
appraisal report for such owned property.
Petitioner will pay rent and all operating costs to RTC for its use and occupancy of the above
real property interests during the option periods.
The gains tax is a ten percent tax on the gain derived from the transfer of real property, which
includes the transfer or acquisitions of a controlling interest in any entity with an interest in real
property, where the property is located in New York State and where the consideration for the
transfer is one million dollars or more.
Section 1440.4 of the Tax Law defines the term "interest in real property" to mean:

4. "Interest" when used in connection with real property includes but is not limited
   to title in fee, a leasehold interest, a beneficial interest, an encumbrance, a transfer of
   development rights or any other interest with the right to use or occupancy of real property
   or the right to receive rents, profits or other income derived from real property. Interest shall
   also include an option or contract to purchase real property.
   TP-9 (9/88)

-2­
TSB-A-91 (2) R
Real Property
Transfer Gains Tax
March 11, 1991

Section 1443.3(b) of the Gains Tax Law provides, an exemption from the gains tax in the
following cases:
"3.

If the transferor is one of the following:

*
*
*
(b) The United Nations or any other international organization of which the
United States is a member, the United States of America or any of its agencies or
instrumentalities." (emphasis added)
12 USC Section 1441a(b)(1) provides that RTC ian agency and instrumentality of the United
States. In addition, 12 USC Section 1441a concerning exemption for the RTC from State and local
taxation provides as follows:
(g) Exemption from State and local taxation. The Corporation and the
Oversight Board, the capital, reserves, surpluses, or assets shall be exempt
from State, municipal, and local taxation except taxes on real estate held by
the Corporation, according to its value as other similar property held by other
persons is taxed.
Further, 12 USC Section 1441a(b)(4) provides, in part, that the RTC shall have the same
powers and rights to carry out its duties where it is the receiver of an insured depository institution
as the Federal Deposit Insurance Company has under 12 USC Sections 1821, 1822 and 1823.
12 USC Section 1821(d) provides, in part, that the RTC as receiver, and by operation of law
shall have all rights, titles, powers, and privileges of the insured depository institution, and of any
stockholder, member, account holder, depositor, officer, or director of such institution with respect
to the institutions and the assets of the institution.
Pursuant to 12 USC Sections 1441a(b)(4) and 1821(d), RTC as receiver and by operation of
law is the transferor of all Empire's assets, which would include all its interests in real property.
Interest in real property is defined pursuant to Section 1440.4 of the Tax Law to include fee interests,
leasehold interests and options. However, Section 1443.3(b) of the Tax Law provides exemption
from the gains tax where the transferor is an agency or instrumentality of the United States. Pursuant
to 12 USC Section 1441a(b)(1) RTC is an agency and instrumentality of the United States. Also,
RTC is exempt from State and local taxation pursuant to 12 USC Section 1441a(g). Accordingly,
any transfers of interests in real property by RTC as receiver for Empire to Petitioner are exempt
from gains tax.

-3­
TSB-A-91 (2) R
Real Property
Transfer Gains Tax
March 11, 1991

It is noted that this opinion does not address the gains tax consequences for the transfer of
real property by Empire to RTC for which a gains tax filing may be required.

DATED: March 11, 1991

PAUL B. COBURN
Deputy Director
Taxpayer Services Division

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.