Tax Type
Recordation Tax
Description
Computation of Recordation Tax
Topic
Computation of Tax
Date Issued
12-29-1987
1987-1988 Att'y Gen. Ann. Rep. 563
December 29, 1987
Honorable David A. Bell
Clerk, Circuit Court for Arlington County
Your inquiry concerns the computation of the recordation tax on a deed of trust "wraps around" an existing deed of trust. Specifically, you ask what rate must be the computation of the reduction tax on a $50 million wraparound deed of trust under § 58.1-803(E) of the Code of Virginia, when the original deed of trust secures a $36 million debt.
I. Applicable Statutes
Section 58.1-803(C) states, in pertinent part:
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- On deeds of trust or mortgages which are supplemental to or wrap around existing deeds of trust on which the tax imposed hereunder has already been paid, the tax shall be paid only on that portion of the face amount of the bond or obligation secured thereby which is in addition to the amount of the existing debt secured by a deed of trust or mortgage on which tax has been paid. [Emphasis added.]
Section 58.1-803(E) provides:
- On deeds of trust or mortgages which are supplemental to or wrap around existing deeds of trust on which the tax imposed hereunder has already been paid, the tax shall be paid only on that portion of the face amount of the bond or obligation secured thereby which is in addition to the amount of the existing debt secured by a deed of trust or mortgage on which tax has been paid. [Emphasis added.]
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- The maximum tax on the recordation of any deed of trust or mortgage or on any indenture supplemental thereto shall be determined in accordance with the following schedule:
On the first 10 million dollars of value as determined pursuant to this section, 15¢ upon every $100 or portion thereof;
On the next 10 million dollars of value as determined pursuant to this section, 12¢ upon every $100 or portion thereof;
On the next 10 million dollars of value as determined pursuant to this section, 9¢ upon every $100 or portion thereof;
On the next 10 million dollars of value as determined pursuant to this section, 6¢ upon every $100 or portion thereof;
On all over 40 million dollars of value as determined pursuant to this section, 3¢ upon every $100 or portion thereof incorporated into this section. [Emphasis added.]
- The maximum tax on the recordation of any deed of trust or mortgage or on any indenture supplemental thereto shall be determined in accordance with the following schedule:
II. Statute Must Be Read as Whole and Each Part Given Effect
Various provisions of a statute must be read as a consistent and harmonious whole, with effect given to each word. See Jones v. Conwell, 227 Va. 176, 314 S.E.2d 61 (1984); VEPCO v. Prince William Co, 226 Va. 382, 309 S.E.2d 308 (1983); 1985-1986 Att'y Gen. Ann. Rep. 177, 178. The rate schedule in § 58.1-803(E) applies a declining rate to successive 10 million dollar increment of "value as determined pursuant to this section.” Section 58.1-803(C) also provides that the tax must be paid only on that portion of the amount of the obligation secured by the wraparound deed of trust "which is in addition to” the amount of the existing debt secured by the deed of trust on which the tax has previously been paid.
The calculation of the recordation tax, therefore, is intended to take into account the fact that the tax has already been paid on the original amount secured. The focus of § 58.1-803(C) and (E), when read together, is upon the amount which is in addition to the original amount secured. This is not a separate, new debt for which a separate calculation must be made. It is my opinion, therefore, that the total recordation tax to be paid for both the original and supplemental recordings is the same tax which would due if the total debt was secured by a single instrument.
III. Graduated Lower Rates Used to Compute Tax
on Recordation of Wraparound Deed of Trust
on Recordation of Wraparound Deed of Trust
Based on the above, it is my opinion that, in the situation you present, the 6¢ should be used to compute the recordation tax on the first 4 million dollars of supplemental debt secured by the wraparound deed of trust and the 3¢ rate should used to compute the tax on the remaining amount of additional value secured by wraparound deed of trust.
Attorney General's Opinion