Tax Type
Recordation Tax
Description
Taxpayer must refinance his debt with the mortgage company that holds the deed of trust.
Topic
Exemptions
Property Subject to Tax
Records/Returns/Payments
Date Issued
02-24-2011
February 24, 2011
Re: § 58.1-1821 Application: Recordation Tax
Dear *****:
This will reply to your letter in which you request a refund of state and local recordation taxes paid by ***** (the "Taxpayer") for recording a refinanced deed of trust. I apologize for the delay in the Department's response.
FACTS
The Taxpayer refinanced her mortgage and recorded the refinanced deed of trust in the ***** (the "County"). The County determined that the Taxpayer was not entitled to the provisions under Va. Code § 58.1-803 D for refinancing with the same lender. The Taxpayer contends that the refinanced loan was made through the same lender.
DETERMINATION
Virginia Code § 58.1-803 A, imposes the recordation tax on deeds of trust, mortgages, and supplemental indentures. Under Va. Code § 58.1-803 D, when a deed of trust is used in refinancing an existing debt with the same lender and the tax has been previously paid on the original deed of trust securing the debt, the recordation tax will only apply to the portion of the deed of trust that exceeds the amount originally secured by the original debt.
The Department has defined "existing debt with the same lender" to mean that the lender providing the refinancing must be the same as the lender now holding the existing debt being refinanced. See Public Document (P.D.) 96-384 (12/20/1996) and P.D. 06-3 (1/6/2006). In other words, in order to qualify for the exemption provided in Va. Code § 58.1-803 D, a taxpayer must refinance his debt with the mortgage company that holds the deed of trust.
The Department has made several attempts in writing to obtain the information necessary to verify that the Taxpayer refinanced her deed of trust with the same lender. To date, the requested information has not been received. Because the Taxpayer has failed to furnish the requested information, there is no basis to grant the requested refund of recordation tax.
I will grant the Taxpayer one final opportunity to provide a copy of her original deed of trust and the refinanced deed of trust to substantiate her claim that she is entitled to the exemption for refinancing with the same lender. Please send the documentation within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, Post Office Box 27203, Richmond, Virginia 23261-7203, Attention: ****. If the requested information is not provided within the allotted time, the refund request will be denied.
The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions regarding this determination, please contact ***** in the Office of Tax Policy,Appeals and Rulings, at *****.
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- Sincerely,
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- Linda D. Foster
Deputy Tax Commissioner
- Linda D. Foster
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AR/1-4204900906.B
Rulings of the Tax Commissioner