HARRISBURG, PA-A new provision in the state tax code is closing a loophole that previously allowed some major real estate investors to avoid paying transfer taxes on acquisitions.

State Sen. Jim Ferlo reports that he led a bi-partisan effort to ensure investors pay the state's transfer tax. While the state's 89-11 loophole was eliminated at the end of last year, the senator states, “This year's tax code clarified some definitions under the law and detailed the types of contractual relationship that trigger the collection of this tax. This effort levels the tax playing field.”

Previously, the 89-11 loophole allowed an investor to acquire 89% of the interest in the company that owns a property, then buy the remaining 11% of the company within three years. The state's deed-transfer tax only kicks in when 90% or more of the investment is transferred within three years, according to the Pittsburgh Business Times.

The newspaper reports the law has been changed to require investors who seek to buy real estate-owning holding companies in order to acquire real estate without a deed transfer to pay the tax anyway. The new provision takes effect on Jan. 1, 2014, See story in the Pittsburgh Business Times.