A provision in Pennsylvania's new property transfer law could save fitness business owners thousands in taxes when their real estate passes to the next generation.
Most Pennsylvania gym and fitness studio owners don't realize that a new state law has quietly eliminated a significant tax burden they'd otherwise face when transferring their business property to heirs.
The provision is buried in HB2124, a bill focused on uniform property transfer procedures. But for owners of facilities that own their real estate, the tax exemption in this law could mean substantial savings.
When real property—including the building or land your gym operates from—passes to heirs at your death, Pennsylvania and your local municipality normally collect a realty transfer tax. That tax is roughly 2% of the property's value at the state level, plus local taxes that vary by county and municipality.
For a fitness studio with a $500,000 building, that's $10,000 or more in taxes owed by your heirs, before any other estate costs are factored in.
Under the new law, if you use a Transfer on Death (TOD) deed—a legal document that names who inherits your property when you die—those state and local realty transfer taxes are waived entirely. The property transfers directly to your named beneficiary without triggering the tax.
This applies specifically to gym and fitness studio owners who own the real property their business operates from. If you lease your space, this doesn't affect you. If you own the building, this could be relevant to your estate planning.
The exemption applies when the property owner dies on or after the law's effective date. HB2124 becomes effective 180 days after enactment, which means the tax benefit applies to transferors dying on or after that date. (See § 21B03 for the specific language.)
A TOD deed is a straightforward estate planning tool. You name a beneficiary or beneficiaries in the deed itself. When you die, the property transfers to them automatically, outside of probate, without the need for a will or court process. The realty transfer tax exemption is codified in § 21B13(f) of the new law.
This can simplify the transition of your business to family members or a chosen successor, and it removes a significant financial barrier to that transfer.
If you own the real estate your gym or studio operates from, it's worth discussing TOD deeds with an estate planning attorney. The mechanics are straightforward, but the tax savings—and the probate avoidance—make it worth understanding how it fits into your specific situation.
Pennsylvania's fitness industry associations and local business advisors have more detailed guidance available for owners considering this option.
This explainer is based on HB2124, Section 21B13(f), effective 180 days after enactment. Consult a Pennsylvania-licensed attorney for advice specific to your business and estate.