Tax Type
Recordation Tax
Description
Quitclaim Deed
Topic
Documents Subject to Tax
Date Issued
12-30-1986
[Opinion - Virginia Attorney General: 1986 at 324]
REQUEST BY: Honorable Shelby J. Marshall Clerk, Circuit Court of Albemarle County
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask whether a certain quitclaim deed offered for recordation is subject to (1) the grantee's tax imposed by § 58.1-801 of the Code of Virginia and (2) the grantor's tax imposed by § 58.1-802. By this deed, the Farmers Home Administration ("FHA") conveys real property to private purchasers at a public auction of such property on which the government had previously foreclosed. The deed recites that
[t]he UNITED STATES OF AMERICA, Acting through the Administrator of the [FHA], United States Department of Agriculture, CONVEYS and QUITCLAIMS to [husband and wife], tenants by the entirety, Grantee, for the sum of TEN DOLLARS ($ 10.00) and other valuable consideration all interest in the following described real estate. . . .
I. No Exceptions to Grantee's Tax Imposed by § 58.1-801 Apply
The grantee's tax is imposed by § 58.1-801, which states that "[o]n every deed admitted to record, except a deed exempt from taxation by law, there is hereby levied a state recordation tax." (Emphasis added.) The fact that the deed presented is a quitclaim deed is irrelevant to its tax status. A quitclaim deed is subject to tax unless a specific exemption otherwise applies. See Virginia Recordation Tax Regulation § 630-14-801(A)(11) (1985). Exemptions from the grantee's tax are found in § 58.1-811(A). None of the thirteen exemptions listed applies to the facts in this case, and I am aware of no other exemption under which the grantees in question can avoid the tax.
II. Grantor's Tax Not Computed on Any of Three Prohibited Taxation Bases
The grantor's tax is imposed by § 58.1-802, which provides, in pertinent part:
[A] tax is hereby imposed on each deed, instrument, or writing by which lands, tenements or other realty sold is granted, assigned, transferred, or otherwise conveyed to, or vested in the purchaser. . . . The rate of the tax, when the consideration or value of the interest exceeds $ 100, shall be. . . .
The grantor's tax may not be imposed, on constitutional grounds, upon conveyances from the United States or its agencies unless the act creating the particular agency involved, or some other federal act, expressly consents to its imposition. See Federal Land Bank v. Hubard, 163 Va. 860, 178 S.E. 16 (1935); Reports of the Attorney General: 1980-1981 at 292; 1969-1970 at 286; 1967-1968 at 282; 1959-1960 at 362; Virginia Recordation Tax Regulation § 630-14-802(E)(7) (1985).
By enacting 42 U.S.C. § 1490h, Congress has given its consent to the taxation of certain property held by the FHA.1 The statute provides general consent to allow state and local taxation of FHA-held property. The statute then limits this consent, however, by prohibiting a tax on or with respect to any instrument if the tax is based on any one of three enumerated bases. Generally, a tax is prohibited if it is based on (1) the value of any notes or mortgages held by or transferred to the Secretary of Agriculture; (2) any notes or lien instruments administered by the FHA which are made, assigned, or held by a person otherwise liable for the tax; or (3) the value of any property conveyed or transferred to the Secretary of Agriculture.
The grantor's tax in § 58.1-802 is not computed on any of these three prohibited bases. Rather, the value upon which the tax is computed is the amount of consideration given, exclusive of the value of any lien or encumbrance remaining on the property at the time of the sale. See § 58.1-802(A). Moreover, the third basis for prohibiting the tax is inapplicable for the additional reason that the property is not conveyed or transferred to the Secretary of Agriculture.
III. Conclusion: Both Grantee's and Grantor's Tax Should Be Imposed
Based on the above, it is my opinion that the quitclaim deed offered for recordation is subject to both the grantee's tax imposed by § 58.1-801 and the grantor's tax imposed by § 58.1-802.
1 Section 1490h states as follows: "All property subject to a lien held by the United States or the title to which is acquired or held by the Secretary under this title other than property used for administrative purposes shall be subject to taxation by a State, Commonwealth, territory, possession, district, and local political subdivisions in the same manner and to the same extent as other property is taxed: Provided, That no tax shall be imposed or collected on or with respect to any instrument if the tax is based on --
(1) the value of any notes or mortgages or other lien instruments held by or transferred to the Secretary;
(2) any notes or lien instruments administered under this title which are made, assigned, or held by a person otherwise liable for such tax; or
(3) the value of any property conveyed or transferred to the Secretary, whether as a tax on the instrument, the privilege of conveying or transferring, or the recordation thereof; nor shall the failure to pay or collect any such tax be a ground for refusal to record or file such instruments, or for failure to impart notice, or prevent the enforcement of its provisions in any State or Federal court." (Emphasis in original.)
Attorney General's Opinion