Tax Type
Recordation Tax
Description
Grantor's Tax
Topic
Basis of Tax
Date Issued
09-11-2001
September 11, 2001
Re: § 58.1-1821 Application: Recordation Tax
Dear *****
This will reply to your letter in which you contest the amount of the grantor's tax assessed on the transfer of real property between ***** (the "Grantor") and ***** (the "Grantee"). I apologize for the delay in responding to your letter.
FACTS
The Grantor conveyed real property to the Grantee by deed for valuable consideration. The deed recites that the property was conveyed subject to two separate deeds of trust. Under the provisions of the deed, the Grantee assumes the obligations of the maker and Grantor of these notes.
A grantor's tax was assessed based on the entire consideration, without accounting for the two deeds of trust securing the real property. Upon agreement between the Grantor and the Grantee, the Grantee paid the grantor's tax. You contend that the grantor's tax was erroneously assessed because it did not account for the two deeds of trust. You request that a refund be issued to the Grantee reflecting the consideration less the value of the liens.
DETERMINATION
Code of Virginia § 58.1-802 provides in pertinent part:
-
- [t]he rate of the [grantor's] tax, when the consideration or value of the interest exceeds $100, shall be 50¢ for each $500 or fraction thereof, exclusive of the value of any lien or encumbrance remaining thereon at the time of the sale, whether such lien is assumed of the realty is sold subject to such lien or encumbrance. [Emphasis added.]
You have provided evidence that there are two deeds of trust securing liens on the conveyance in question. The value of both liens must be removed from the consideration of the conveyance when calculating the grantor's tax. You contend that the actual value of the liens is the face value of the notes. However, the grantor's tax is based on the value of the liens at the time of the sale, not the face value of the notes. See Public Document ("P.D.") 86-238 (11/19/86) and the Report of the Attorney General 1991 at page 290 (copies enclosed). Therefore, the grantor's tax on the conveyance in question was overpaid by the difference between the actual consideration and the value of the two liens at the time of the sale.
Code of Virginia § 58.1-802 (B) states that one-half of the grantor's tax that is collected will go into the state treasury and the other half will go into the treasury of the locality. As such, the department will issue a refund to the Grantee for the state portion of the tax, as shown on the enclosed schedule. A refund of the local recordation tax will be issued to the Grantee by the locality.
If you have any questions regarding this determination, you may contact ***** in the department's Appeals and Rulings Office at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/32306B
Rulings of the Tax Commissioner