Tax Type
Recordation Tax
Description
Clerk has the authority to rely on other evidence to determine the proper amount of the recordation tax.
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
03-14-2011
March 14, 2011
Re: § 58.1-1821 Application: Recordation Tax
Dear *****:
This will reply to your letter in which you request a refund of the state and local recordation taxes paid by ***** (the "Taxpayer") for recording a deed.
FACTS
In May 2010, the Taxpayer presented a deed for recordation to the ***** (the "County"). The County assessed recordation tax based on the assessed value of the property, which was greater than the consideration for the conveyance of the real property interest.
The Taxpayer appeals the assessment and contends that the state and local recordation taxes should have been based on the consideration paid. The Taxpayer has presented an appraisal that values the subject property at less than the consideration of the conveyance in support of its position.
DETERMINATION
Virginia Code § 58.1-800 et seq., imposes the state tax on the recordation of documents relating to real estate transactions. A recordation tax is imposed on any instrument admitted to record unless otherwise exempt by statute. Under Va. Code § 58.1-801, a state recordation tax is imposed on deeds of 25¢ on every $100 or fraction thereof of the consideration or the actual value of the property conveyed, whichever is greater. Virginia Code § 58.1-802 imposes an additional grantor's tax of 50¢ on every $500 or fraction thereof, exclusive of any lien or encumbrance remaining thereon at the time of the sale, on the greater of actual value of the property conveyed or the consideration of the sale. Any city or county may impose a recordation tax equal to 1/3 of the amount of state recordation tax. See Va. Code § 58.1-814
In this case, the Taxpayer contends that the consideration paid for the transfer of the property interest represents the best indication of the fair market value for purposes of the grantor's tax. The assessed value is accorded a very strong presumption of accuracy in determining fair market value. See Shoosmith Bros., Inc. v. County of Chesterfield, 268 Va. 241, 601 S. E.2d 641 (2004) and Tidewater Psychiatric Institute, Inc. v. Virginia Beach, 256 Va. 136, 501 S.E.2d 761 (1998).
The Clerk of the Circuit Court, however, is not required to use the assessed value to the exclusion of other reliable information as to the current fair market value. If it can be shown by clear and cogent evidence why the assessed value does not reflect fair market value as of the date of the transaction, the Clerk has the authority to rely on such evidence to determine the proper amount of the recordation tax. See Public Document (P.D.) 06-77 (8/23/2006) and P.D. 00-97 (5/26/2000).
Placing a value on real estate is entirely a factual determination that is best made by one who is thoroughly familiar with the property itself and local market conditions. This responsibility lies with the Clerk when the value must be determined for recordation tax purposes. See P.D. 91-146 (8/2/1991).
The Department will send a copy of this letter to the Clerk of the County and request a review of the determination of the actual value of the property, taking into consideration the Taxpayer's appraisal and all other relevant and reliable information available. When the Clerk informs the Department of the correct fair market value, the Department will refund the appropriate amount of state recordation tax. A refund of the local recordation tax would be issued by the County.
The Code of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website. 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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- Craig M. Burns
Tax Commissioner
- Craig M. Burns
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AR/1-4541233079.B
Rulings of the Tax Commissioner