The Town of Telluride imposes a 3% real estate transfer tax on most transfers, sales and leases of land within its boundaries.  Telluride’s tax casts a broad net and includes almost every transaction supported by consideration of more than $500.00.  Exemptions are made for transfers where there is no consideration.  These include transactions made by will or gift, transfers that change co-ownership (such as from tenants-in-common to joint tenancy), transfers to a living trust in connection with an estate plan, and transfers in connection with the reorganization of a business. The Tax code also exempts from taxation transfers made pursuant to most federal and state court proceedings.   In all cases where  a transfer is believed to be exempt, Telluride’s code requires that the purchaser (or grantor) apply for and obtain a written certificate of exemption from the Town. The transfer tax should not be overlooked whenever there is the possibility that there will be change of ownership in the near future following the purchase of real property.  For example, suppose two individuals or businesses wish to purchase real estate in their own names with the intent of re-conveying the property to a Limited Liability Company, which they will form a short time later.  While such a transfer may be exempt if the owners’ relative interests in the LLC are the same and there is no consideration other than their respective interests in the LLC, it will still be necessary to apply for a certificate of exemption.  If the transfer to the LLC involves bringing a new member onboard or the interests in the LLC will be different for any reason, the 3% tax may be imposed.    Other challenges with the tax are structuring court settlements, and sales of businesses that involve both real and personal property.