Tax Type
Recordation Tax
Description
Basis of Recordation Tax
Topic
Basis of Tax
Documents Subject to Tax
Date Issued
09-19-1991
September 19, 1991
Re: §58.1-1821 Application: Recordation Tax
Dear**********************
This will reply to your letter of March 29, 1991, in which you seek a refund of state and county recordation taxes on behalf of*****************(the "Taxpayer").
FACTS
On October 11, 1990, the taxpayer purchased property at a foreclosure sale. At the time the Trustee's Deed was recorded, the taxpayer presented an appraisal report, as of June 21, 1990, as evidence of the actual value of the property. The clerk computed the recordation tax based on the most recent assessment made for real estate tax purposes, which was substantially higher than the appraised value presented by the taxpayer. Accordingly, recordation taxes were imposed on the assessed value in lieu of either the actual consideration or the appraised value.
The taxpayer is protesting the use of the assessed value as the basis for the recordation tax assessment and believes the appraisal report is an accurate indicator of the actual value of the property; therefore, the recordation tax should be based on the lower appraised value, You note that the 1990 assessment on which the tax is based is being challenged in a separate action.
DETERMINATION
Va. Code §58.1-801 imposes a state recordation tax of 15 cents on every $100 or fraction thereof of the consideration of the deed or the actual value of the property conveyed, whichever is greater. You concede that, in this case, the recordation tax should be based on the "actual value" of the property.
The department has previously ruled that assessed value is accorded a very strong presumption of accuracy in determining actual value, or fair market value (FMV). However, the clerk is not required to use the assessed value to the exclusion of other reliable information as to the current FMV. The taxpayer must present clear and cogent evidence to the clerk to show why the assessed value does not reflect the FMV as of the date of the transaction. See P.D. 91-146 (8/2/91) (copy enclosed).
Although it appears that the clerk refused to consider the taxpayer's appraisal as to evidence of current FMV, believing that he was required to use the assessed value, I am reluctant to overrule the clerk's valuation based on the evidence before me at this time. The fact that experts differ as to a property's value is not sufficient evidence as to which, if any, of the different values is the correct FMV on the date of the transaction.
By copy of this letter to the clerk, I am requesting him to review his determination of the actual value of the property taking into consideration your appraisal and any other relevant and reliable information available. If he advises me that he has determined that the FMV at the time of recordation was less than the assessed value, then the department will refund the appropriate amount of state recordation tax, and a refund of the local recordation tax can be obtained from the locality.
If, after his review, the clerk advises me that his original determination of the actual value is correct, you may resubmit your application to me for reconsideration with sufficient detailed information to show why your appraisals are more accurate than the assessed value.
Because the recordation tax has been paid, and may be affected by the pending action as to the 1990 assessed value, you may also want to consider filing a protective claim for refund pursuant to Va. Code §58.1-1824. This procedure would allow the department to hold your protective claim without action until a final decision in the pending action.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner