Did you know that in Philadelphia, registered Life Partners and other financially interdependent persons can transfer real estate between themselves without incurring Philadelphia transfer tax? Many people think that this citywide benefit no longer exists pursuant to the Pennsylvania Supreme Court’s decision in Devlin v. City of Philadelphia, 580 Pa. 564, 862 A.2d 1234 (Pa. 2004), which struck down these tax exemptions. However, it is back in a new an improved ordinance from City Hall.
In November 2007, Philadelphia City Council amended Chapter 19-4000 of The Philadelphia Code, regarding Realty Transfer Tax, to exempt transfers between financially interdependent persons (FIPs). The amended language went into effect in December 2007 and has been perhaps the city’s best kept secret since that time.
The FIP exemption is significant for its creative response to the Pennsylvania Supreme Court’s ruling in Devlin v. City of Philadelphia, supra. In Devlin, the Pennsylvania Supreme Court struck down a Philadelphia ordinance exempting realty transfers between registered Life Partners from taxation. The problem, in a nutshell, was that the exemption favored same-sex couples but excluded unmarried different-sex couples, thus violating the Pennsylvania Constitution’s uniformity clause.
Three years after Devlin, City Council quietly passed a new ordinance creating an exemption for financially interdependent persons. FIPs are defined as “persons living as a household for at least six months, sharing the common necessities of life and agreeing to be responsible for one another’s welfare.” Couples registered as Life Partners are presumptively FIPs, but the exemption is not limited to them. If a family is operating as an economic unit, then at least in this instance the City of Philadelphia is willing to recognize their interdependence and do what it can to help them help themselves.
The FIP exemption is an improvement over the prior exemption for registered Life Partners because it helps more families than the Life Partner exemption was able to reach, including those same-sex couples who aren’t registered Life Partners. It recognizes that families formed around a relationship other than marriage should not have to pay taxes on the reallocation of property interests within the family unit. This puts registered Life Partners in exactly the same position as they were under the old ordinance. But it also places all same-sex couples within a broader community of non-marital families that receive recognition and support from our government.
There is a strong argument to be made that the FIP exemption should be incorporated statewide. It is grounded in the reality that many families – whether based on marriage, kinship or mutual care – function as economic units and deserve our economic support. When the city (or state) supports and strengthens such families, they become more able to take care of themselves and in turn more able to contribute as citizens. By recognizing and supporting all of the families in our midst, we can take great strides toward achieving economic justice for all.