April 3, 2025
Re: § 58.1-1821 Application: Recordation Tax
Dear *****:
This will respond to your letter in which you request a refund of state and local recordation taxes paid by ***** (the “Taxpayer”) for recording a deed.
FACTS
The Taxpayer purchased real property and paid state and local recordation tax to record the deed with the clerk of the local circuit court. The Taxpayer requests a refund of the tax paid, contending the deed was exempt from the tax because he was a disabled veteran.
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 Virginia Code § 58.1-801, a state recordation tax is imposed on deeds, “except deed[s] exempt from taxation by law,” of 25¢ on every $100 or fraction thereof of the consideration or the actual value of the property conveyed, whichever is greater. Any city or county may impose a recordation tax equal to 1/3 of the amount of state recordation tax. See Virginia Code § 58.1-814.
By reason of their character as legislative grants, statutes relating to exemptions allowable in computing income and credits allowed against a tax liability must be strictly construed against the taxpayer and in favor of the taxing authority. See Howell’s Motor Freight, Inc., et al. v. Virginia Dep’t of Taxation, No. 82-0846 (Roanoke Cir. Ct. Oct. 27, 1983). Virginia Code § 58.1-811 sets forth the deeds that are exempt from the tax imposed by Virginia Code § 58.1-801. That section does not provide an exemption for a deed conveying real estate where the real estate is the primary residence of a disabled veteran.
The Taxpayer believes that because Virginia Code § 58.1-3219.5 exempts the principal residence of a disabled veteran from real property tax, the deed conveying such property should also be exempt from recordation tax. The recordation tax, however, is not a tax on property but rather a tax on the civil privilege of using the state’s registration laws. See Title 23 of the Virginia Administrative Code (VAC) 10-320-10. See also Pocahontas Consol. Collieries Co., Inc. v. Commonwealth, 113 Va. 108, 112 (1912).
While the Department empathizes with the Taxpayer’s circumstances and greatly appreciates his service to our country, the Department cannot grant an exemption that is not set forth in the law. Accordingly, the requested refund cannot be granted.
The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at ***** or *****.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/4939.X