Bulletin Number
VTB 81-18
Tax Type
Recordation Tax
Description
1981 Legislative Changes to Recordation Taxes
Topic
Documents Subject to Tax
Date Issued
08-10-1981
A Virginia Tax Bulletin, dated June 1, 1981, was issued setting forth the 1981 legislative changes to recordation taxes. Among the changes set forth in the Tax Bulletin were the changes to Section 58-60, Code of Virginia, relating to deeds of assumption. The purpose of this bulletin is to further clarify this change.
Prior to July 1, 1981, the effective date of the 1981 changes to Section 58-60, the assumption of a deed of trust, which is a separate transaction from the conveyance of real estate, was a separate taxable event. Agreements to assume an existing mortgage or deed of trust are now exempt under the recent amendment to Section 58-60. Conveyances, however, remain fully subject to tax under Sections 58-54, et seq.
The exemption for deeds of assumption would apply where there is a clause or paragraph in a deed of conveyance, or bargain and sale, by which the purchaser assumes the deed of trust or mortgage of the grantor (seller). This agreement to assume an existing mortgage or deed of trust may be presented for recordation separately as a deed or agreement of assumption. The title given to an instrument is not controlling and each clerk must determine the nature of the particular transaction or transactions contained in an instrument and determine the taxability of each.
The recent amendments may be explained by the following example:
| Real estate sold for: Cash payment for equity Assumption of a Deed of Trust Tax under Section 58-54, computed on the consideration of $100,000.00: Tax under Section 58-54.1, computed on consideration ($100,000.00) less value of lien or encumbrance ($70,000.00) remaining on real estate at time of sale: Tax under Section 58-65.1 by county or city:: TOTAL TAX (State & Local) | $100,000.00 30,000.00 70,000.00 150.00 30.00 50.00 $230.00 |
Questions should be addressed to the Department of Taxation, P. O. Box 6-L, Richmond, Virginia 23282. Attention: Office Services Division.
Tax Bulletins