Tax Type
Recordation Tax
Description
Conveyance to a trust
Topic
Exemptions
Date Issued
02-24-1987
February 24, 1987
Re: §58.1-1821 Application; Recordation Tax
§58.1-811 A.12. Conveyance to a trust
Dear ****************
This is in response to your letter of August 7, 1986, in which you requested a refund of the recordation tax imposed on a deed conveying property to a trust. I apologize for the delay in responding to your letter.
FACTS
The deed in question is a quit claim deed by which you convey property to yourself as trustee under a declaration of trust. The declaration of trust established a revocable inter-vivos trust for your benefit during your lifetime, and upon your death for the benefit of your brother and sister.
On September 6, 1985, you presented the deed and declaration of trust to the clerk of the circuit court for recordation. The clerk refused to record the declaration of trust and imposed the recordation tax upon the deed.
DETERMINATION
You claim that the deed should have been recorded free of tax under the exemption in Virginia Code §58.1-811 A.12. which is as follows:
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- A. The taxes imposed by §§58.1-801 and 58.1-803 shall not apply to any deed conveying real estate:
* * * *
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- 12. To trustees of a trust, when the grantors in the deed and the beneficiaries of the trust are the same persons; and to the original beneficiaries of a trust from the trustees holding title under a deed in trust;
- 12. To trustees of a trust, when the grantors in the deed and the beneficiaries of the trust are the same persons; and to the original beneficiaries of a trust from the trustees holding title under a deed in trust;
In the declaration of trust you reserved to yourself all of the "incidents of ownership" during your lifetime, including the right to amend or revoke the trust without the consent of any beneficiary. Thus the other beneficiaries do not have a present interest in the real estate conveyed to the trust because their interest is contingent.
It is well settled that exemptions from taxation are to be strictly construed against the exemption. The statute grants an exemption only to deeds where the grantors in the deed and the beneficiaries of the trust are the same persons. The statute does not distinguish between beneficiaries with different types of interests. It is clear that the grantor in the deed in question and the beneficiaries named in the declaration of trust are not identical. Therefore the deed does not qualify for the exemption. In a letter dated July 25, 1983, the department advised a clerk of the circuit court that a similar transaction would not qualify for the exemption. I enclose a copy of the letter for your information.
Accordingly the tax was properly imposed and collected by the clerk of the court on the deed.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner