Tax Type
Recordation Tax
Description
Refund request, Basis of valuation
Topic
Basis of Tax
Date Issued
05-26-2000
May 26, 2000
Re: § 58.1-1821 Application: Recordation Tax
Dear ****
This will reply to your letter of in which you seek a refund of state and local recordation taxes on behalf of ****** (the "Taxpayer").
FACTS
In February 2000, the taxpayer purchased property at a foreclosure sale. At the time the Trustee's Deed was recorded, the taxpayer presented an appraisal report as evidence of the actual value of the property. The Clerk of the applicable Circuit Court computed the recordation tax based on the most recent assessment made for real estate tax purposes, which was substantially higher than the appraised value presented by the taxpayer. Accordingly, recordation taxes were imposed on the assessed value in lieu of the actual consideration, which was the same as the appraised value.
The Taxpayer believes that the appraisal report is an accurate indicator of the actual value of the property and that the recordation tax should be based on the lower appraised value rather than the assessed value. The Taxpayer requests a refund of the state and local recordation tax assessed on the excess the of the assessed value over the appraised value.
DETERMINATION
The department has previously ruled on this issue in Public Document ("P.D.") 91-220 (1/1/91), copy enclosed. Code of Virginia § 58.1-801 imposes a state recordation tax of 15 cents on every $100 or fraction thereof of the consideration of the deed or the actual value of the property conveyed, whichever is greater. The assessed value is accorded a very strong presumption of accuracy in determining actual value, or fair market value ("FMV"). However, the clerk is not required to use the assessed value to the exclusion of other reliable information as to the current FMV. The taxpayer must present clear and cogent evidence to the clerk to show why the assessed value does not reflect the FMV as of the date of the transaction. See P.D. 91-146 (8/2/91) (copy enclosed).
The department is reluctant to overrule a Clerk of the Court's valuation which is based on the assessed value of the property. The fact that experts differ as to a property's value is not sufficient evidence as to which, if any, of the different values is the correct FMV on the date of the transaction.
The department will send a copy of this letter to the Clerk of Court and request a review of the determination of the actual value of the property, taking into consideration your appraisal and any other relevant and reliable information available. If the clerk advises the department that she has determined that the FMV at the time of recordation was less than the assessed value, then the department will refund the appropriate amount of state recordation tax. A refund of the local recordation tax would be issued from the locality.
If, after her review, the clerk advises the department that her original determination of the actual value is correct, you may resubmit your application to the department for reconsideration with sufficient detailed information to show why your appraisals are more accurate than the assessed value. If you have questions regarding this determination, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/28528B
Re: § 58.1-1821 Application: Recordation Tax
Dear ****
This will reply to your letter of in which you seek a refund of state and local recordation taxes on behalf of ****** (the "Taxpayer").
FACTS
In February 2000, the taxpayer purchased property at a foreclosure sale. At the time the Trustee's Deed was recorded, the taxpayer presented an appraisal report as evidence of the actual value of the property. The Clerk of the applicable Circuit Court computed the recordation tax based on the most recent assessment made for real estate tax purposes, which was substantially higher than the appraised value presented by the taxpayer. Accordingly, recordation taxes were imposed on the assessed value in lieu of the actual consideration, which was the same as the appraised value.
The Taxpayer believes that the appraisal report is an accurate indicator of the actual value of the property and that the recordation tax should be based on the lower appraised value rather than the assessed value. The Taxpayer requests a refund of the state and local recordation tax assessed on the excess the of the assessed value over the appraised value.
DETERMINATION
The department has previously ruled on this issue in Public Document ("P.D.") 91-220 (1/1/91), copy enclosed. Code of Virginia § 58.1-801 imposes a state recordation tax of 15 cents on every $100 or fraction thereof of the consideration of the deed or the actual value of the property conveyed, whichever is greater. The assessed value is accorded a very strong presumption of accuracy in determining actual value, or fair market value ("FMV"). However, the clerk is not required to use the assessed value to the exclusion of other reliable information as to the current FMV. The taxpayer must present clear and cogent evidence to the clerk to show why the assessed value does not reflect the FMV as of the date of the transaction. See P.D. 91-146 (8/2/91) (copy enclosed).
The department is reluctant to overrule a Clerk of the Court's valuation which is based on the assessed value of the property. The fact that experts differ as to a property's value is not sufficient evidence as to which, if any, of the different values is the correct FMV on the date of the transaction.
The department will send a copy of this letter to the Clerk of Court and request a review of the determination of the actual value of the property, taking into consideration your appraisal and any other relevant and reliable information available. If the clerk advises the department that she has determined that the FMV at the time of recordation was less than the assessed value, then the department will refund the appropriate amount of state recordation tax. A refund of the local recordation tax would be issued from the locality.
If, after her review, the clerk advises the department that her original determination of the actual value is correct, you may resubmit your application to the department for reconsideration with sufficient detailed information to show why your appraisals are more accurate than the assessed value. If you have questions regarding this determination, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/28528B
Rulings of the Tax Commissioner