Tax Type
Recordation Tax
Description
Exemption for recordation taxes that are erroneously paid
Topic
Exemptions
Payment and Refund
Taxable Transactions
Date Issued
06-08-2005
June 8, 2005
Re: § 58.1-1821 Application: Recordation Tax
Dear ********:
This will reply to your letter in which you request a refund of recordation taxes paid on the filing of a deed and deed of trust by ***** (the "Grantor") and ***** (the "Grantees").
FACTS
In June 2004, a deed and deed of trust for a residential real estate transaction were recorded in the land records of ***** (the "County") and grantor and grantee recordation taxes were paid. Shortly thereafter, an affidavit, signed by both the Grantor and Grantees, was filed in the County's land records, stating that the deed and deed of trust were null and void and should not have been recorded because the lender cancelled the purchase money loan. Several days later, a deed and deed of trust were recorded on behalf of the same Grantor and Grantees, and the grantor and grantee recordation taxes were paid again.
You request a refund of the state and local portions of the recordation taxes paid on the original deed and deed of trust. A request for a refund of the state portion of the recordation taxes was originally denied by the Department on the basis that no exemption applies for recordation taxes that are erroneously paid.
DETERMINATION
Virginia Code § 58.1-801 imposes a recordation tax on every deed admitted to record at a rate of "25 cents on every $100 or fraction thereof of the consideration of the deed or the actual value of the property conveyed, whichever is greater." In the case presented, the lender cancelled the loan to the buyer. As such, no consideration was given for the deed and no property was conveyed. Accordingly, the consideration of the deed and value of the property conveyed is $0, and no grantee's tax is due on the first deed.
Virginia Code § 58.1-802 provides for a grantor's tax to be 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 tax is imposed at a rate of 50 cents for each $500 or portion thereof of consideration. As stated above, there was no consideration for the deed and no property was conveyed. As such, no grantor's tax is due on the first deed.
Virginia Code § 58.1-803 imposes a recordation tax on deeds of trust or mortgages at a rate of 25 cents on every $100 or portion thereof of the amount of bonds or other obligations secured. Again, no obligations were secured by the first deed of trust. As such, no recordation tax is due on the first deed of trust.
In accordance with the foregoing, a refund for the state portion of the recordation tax for the first deed and deed of trust will be issued shortly pursuant to the enclosed schedule. A copy of this letter will be forwarded to the County for disposition of the local portion of the tax.
The Code of Virginia sections cited, as well as other reference documents, are available on-line in the Tax Policy Library section of the Department of Taxation's web site, located at www.policylibrary.tax.virginia.gov. If you have any questions regarding this determination, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
-
-
-
-
-
-
-
- Kenneth W. Thorson
Tax Commissioner
- Kenneth W. Thorson
-
-
-
-
-
-
AR/52691B
Rulings of the Tax Commissioner