Tax Type
Recordation Tax
Description
Organization meets the criteria set forth in § 58.1-811(A)(14)
Topic
Exemptions
Nonprofits
Property Subject to Tax
Date Issued
03-14-2014
March 14, 2014
The Honorable Michele B. McQuigg
Clerk of the Circuit Court of Prince William County
9311 Lee Avenue
Manassas, Virginia 20110
Dear Ms. McQuigg:
I am responding to your request for an official advisory Opinion in accordance with § 2.2-505 of the Code of Virginia.
-
-
-
-
-
-
-
-
-
-
Issue Presented
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- Response
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- Background
-
-
-
-
-
-
-
-
-
1) Both the grantor and grantee are exempt from the taxes enumerated in §§ 58.1-801 and 58.1807.2) The grantor is exempt, but the grantee is not exempt from the taxes enumerated in §§ 58.1801 and 58.1-807.
3) The grantor is not exempt, but the grantee is exempt from the taxes enumerated in §§ 58.1801 and 58.1-807.
4) Neither party is exempt from the taxes enumerated in §§ 58.1-801 and 58.1-807.
Applicable Law and Discussion
The Virginia Recordation Tax Act (the "Act") requires Circuit Court Clerks in Virginia to collect certain recordation taxes.1 These taxes are based on the privilege of having access to the benefits of state recording and registration laws.2 Your inquiry specifically concerns the recordation tax imposed on deeds. The Act in § 58.1-801 provides:
-
- On every deed admitted to record, except a deed exempt from taxation by law, there is hereby levied a state recordation tax. The rate of the tax shall be 25 cents on every $100 or fraction thereof of the consideration of the deed or the actual value of the property conveyed, whichever is greater.(3)
You also request guidance on the tax on the recordation of contracts and leases relating to real or personal property. The Act in § 58.1-807 provides:
-
- Except as hereinafter provided, on every contract or memorandum thereof relating to real or personal property admitted to record, a recordation tax is hereby levied at the rate of 25 cents on every $100 or fraction thereof of the consideration or value contracted for.[5]
-
- [t]he taxes imposed by §§ 58.1-801 and 58.1-807 shall not apply to any deed conveying real estate or lease of real estate . . [w]hen the grantor is an organization exempt from taxation under § 501(c)(3) of the Internal Revenue Code that is organized and operated primarily to acquire land and purchase materials to erect or rehabilitate low-cost homes on such land, which homes are sold at cost to persons who otherwise would be unable to afford to buy a home through conventional means.{6}
Conclusion
Accordingly, it is my opinion that, so long as the grantor is an organization that meets the criteria set forth in § 58.1-811(A)(14), a deed or contract offered for recording is exempt from the taxes enumerated in §§ 58.1-801 and 58.1-807, and neither the grantee nor the grantor is required to pay those taxes.
-
- With kindest regards, I am
-
-
-
-
-
-
-
-
- Very truly yours,
Mark R. Herring Attorney General
- Very truly yours,
-
-
-
-
-
-
-
-
- With kindest regards, I am
' See VA. CODE ANN. §§ 58.1-800 through 58.1-817 (2013).
- 3 Section 58.1-801(A) (2013).
- Section 58.1-807(A) (2013).
6 Section 58.1-811(A)(14) (2013).
8.Whether Habitat for Humanity is an organization meeting the eligibility criteria set forth in § 58.1-811(A)(14) is a factual determination that must be made by the Clerk of Court. See, e.g., 1990 Op. Va. Att'y Gen. 255, 257 (whether a university's land acquisition is "for educational purposes" and thus meets a recordation tax exemption under § 58.1-811(A)(1) is a question of fact that must be resolved by the Clerk as the local taxing official); 1984-85 Op. Va. Att'y Gen. 391, 392 (Clerk may require such documentation believed necessary to allow the Clerk to determine a partner's percentage participation in "profits and surplus" for purposes of verifying eligibility for the exemptions provided in § 58.1-811(A)(10) and (11)).
9 It should be noted that recordation taxes are imposed on the act of recording an instrument, not on a particular party to the instrument. This is so even when the legal incidence of the tax is statutorily prescribed, as is the case with the grantor's tax imposed by § 58.1-802. See 23 VA. ADMIN. CODE § 10-320-30(C) (2013). When the grantor of the instrument is a qualifying organization meeting the eligibility criteria set forth in § 58.1-811(A)(14), the act of recording is exempt from taxation, regardless of who bears the economic burden of the tax.
Attorney General's Opinion