Tax Type
Recordation Tax
Description
Refinanced mortgage
Topic
Documents Subject to Tax
Date Issued
12-20-1996
December 20, 1996
Re: §58.1-1821 Application: Recordation Tax
Dear**************
This will reply to your letter in which you request a refund of recordation taxes assessed on the refinancing of your mortgage. I apologize for the delayed response.
FACTS
The mortgage on your home was financed by a mortgage company (Company A) and the recordation tax was paid on the deed of trust. Company A sold your mortgage to another mortgage company (Company B). You used Company A to refinance the mortgage of Company B, and the recordation tax was paid again on the deed of trust. In that you have refinanced your mortgage with Company A, your original mortgage company, you are requesting that the second payment of recordation tax be refunded .
DETERMINATION
Code of Virginia §58.1-803(A), copy enclosed, imposes the recordation tax on deeds of trust, mortgages, and supplemental indentures. Code of Virginia §58.1-803(D) exempts from the recordation tax on certain refinanced deeds of trust and mortgages by providing that:
On deeds of trust or mortgages, the purpose of which is to refinance or modify the terms of an existing debt with the same lender, which debt is secured by a deed of trust or mortgage on which the tax imposed hereunder has been paid, the tax shall be paid only on that portion of the amount of the bond or other obligation secured thereby which is in addition to the amount of the existing debt secured by a deed of trust or mortgage on which the tax has been paid. (Emphasis added.)
As a result, 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 not apply to the deed of trust for the existing debt.
The Virginia Attorney General has issued an opinion which addressed the exemption from recordation tax when lenders provide refinancing of certain deeds of trust. (See 1992 Att'y Gen. Ann. Rep.181, copy enclosed.) The opinion interpreted, "existing debt with the same lender," to mean that the "existing debt, rather than the original debt, be with the same lender who is providing the refinancing." The Attorney General, further, concluded that the "'same lender' in 58.1-803(D) means that the lender providing the refinancing must be the same as the lender now holding the existing debt being refinanced." The recordation tax exemption, therefore, applies when the existing debt is being refinanced by the lender who holds the debt.
In the instant case, the Company A sold your mortgage to Company B. You refinanced the mortgage with Company A. You, therefore, did not refinance your existing mortgage with Company B which held the mortgage. Consequently, the deed of trust used to refinance of your mortgage was not exempt from the recordation tax.
Although I am sympathetic with your situation, there is no basis for refunding recordation tax paid. If you have additional questions, please contact*************at*************.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner