A bill sponsored by Del. Scott Garrett to fix a tax collected when deeds are recorded actually involves a sizable amount of cash, two urban localities told a Senate committee Wednesday.
Garrett, R-Lynchburg, learned his HB 509 is significant for three places: Richmond and the counties of Fairfax and Henrico.
A statewide association of circuit court clerks learned 117 localities collect recordation taxes the way the state Department of Taxation require — the recordation tax is based on amount of money a property owner borrows under a deed of trust.
But Fairfax County, Henrico County and Richmond base their tax on the full value of the property.
The difference adds up: when one of the counties calculated the tax on its largest transactions, $10 million and up, the county sent $514,000 into Virginia’s tax coffers.
But under the Tax Department formula, the amount would have been $236,000 — meaning Virginia would have lost $277,000 in revenue.
Nevertheless, the Senate Finance Committee approved Garrett’s HB 509 to collect the smaller amount in those three localities. But the panel adopted an amendment to give the localities until 2014 to adapt.
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