Tax Type
Recordation Tax
Description
Deed of gift
Topic
Exemptions
Date Issued
10-17-1993
October 17, 1993
Re: Ruling Request: Deed of Gift; Recordation Taxes
Dear*****************
This will reply to your letter dated April 6, 1993, requesting a ruling on whether the recordation of a certain transfer of property in Fairfax County is subject to recordation taxes.
FACTS
*********** ("Deed 1") conveying property from ************* ("Grantors") to*****(Relocation Company"), a California corporation was presented for recordation. Although Deed one contained a recital of consideration, the attorney handling the transaction stated that no money was exchanged between the Relocation Company and the Grantors and claims that this deed is exempt from recordation taxes as a deed of gift.
The Relocation Company conveyed the property by a Deed of Bargain and Sale ("Deed 2") dated February 8, 1993, to *********** ("Grantees"). Deed 2 was presented for recordation on the same day as Deed 1. A Deed of Trust, dated March 26, 1993, was also recorded indicating that the Grantees borrowed********** to finance the purchase of the property.
RULING
Subsection D of Virginia Code §58.1-811 grants an exemption from recordation taxes if four conditions are satisfied: (i) there is a deed of gift; (ii) between individuals; (iii) without consideration; and (iv) the deed states that it is a deed of gift. Examination of the facts and circumstances surrounding this deed indicate that none of the four conditions is satisfied.
A deed of gift conveys property to execute a gift rather than to execute the grantor's obligation under a contract, agreement, court order, or for any other reason. In other words, there must be donative intent on the part of the grantor. No such intent has been demonstrated. The nature of the parties suggest that the employer of one of the grantors offered relocation assistance to a transferred employee who must sell a home. A deed conveying property is not a deed of gift if the property is conveyed to the employer, or a relocation company hired by the employer, in order to receive benefits under the employer's relocation assistance package.
The deed must be from an individual grantor or grantors to an individual grantee or grantees. Since the grantee is a corporation, it is clear that the second requirement is not met. See 1984-1985 Att'y Gen. Ann. Rep. at 383 (copy enclosed).
The attorney who presented the deed for recordation states that no money was exchanged. However, the term "consideration" is much broader than money. It includes anything of value, such as assuming or releasing a liability of the grantor, an agreement to share future profit, or any other benefits even if they are subject to contingencies. Although not named as a party to any of the deeds, the circumstances suggest that the grantor's employer may have offered consideration for the conveyance to its agent, the Relocation Company, in the form of employee benefits such as a relocation assistance package. For example, the grantor would clearly have received very valuable consideration if there had been a loan outstanding on the property conveyed, and the loan was subsequently paid by either the Relocation Company or the employer. I note also that the deed recites the fact that the grantor received and other good and valuable consideration. Recitals of fact in a recorded deed are deemed prima facie correct. Va. Code §8.01-389.
The purported deed of gift is actually a form "Deed of Bargain and Sale" in which the words "bargain and sale" in the title have been struck out and "of gift" typed. However, the body of the deed states that the deed is "in consideration of************** and other good and valuable consideration, receipt of which is hereby acknowledged" and that the grantor does "grant, bargain, sell and convey" the property. This language is inconsistent with a deed of gift. Therefore, I find that the deed did not adequately state that it was a deed of gift and, as noted above, it was not in substance a deed of gift.
If the attorney who presented the purported deed of gift still maintains that it is exempt from recordation tax, you should exercise your authority under Va. Code §58.1-812 to investigate the deed's qualification for an exemption. You may demand an affidavit, copies of relevant contracts, loan payment information, and other extrinsic evidence showing the existence of consideration or other factors bearing on qualification for an exemption (specifically in this case, agreements involving any employee benefits or relocation assistance offered to the grantor in connection with the conveyance).
Accordingly, recordation taxes are due and payable on the deed conveying property to the Relocation Company. Since the consideration has not been disclosed, and may not be ascertainable, the tax should be based upon the actual value of the property conveyed. The tax, if not promptly paid, may be assessed by the department to the attorney who presented the deed for recordation and provided the erroneous information as to the nature of the deed. See P.D. 90-124 (8/14/90, copy enclosed). If necessary, please provide the department with sufficient information to calculate and assess the proper recordation taxes to the attorney.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6918L
Rulings of the Tax Commissioner