Tax Type
Recordation Tax
Description
Realty transfer tax; Land purchased in partition action
Topic
Documents Subject to Tax
Date Issued
08-30-1990
August 30, 1990
Re: §58.1-1821 Application; Recordation Tax
§58.1-801 Deeds Generally
§58.1-806 Deeds of Partition
Dear***************
This is in response to your letter of March 8, 1990 in which you requested that the Department of Taxation reconsider its interpretation of the definition of a deed of partition for purposes of the state recordation tax. You contend that the deed resulting from a partition suit is a deed of partition subject to the 50 cent recordation tax under Va. Code §58.1-806. In previous correspondence the department held that the transaction resulted in partition by deed of conveyance, subject to the taxes imposed under Va. Code §§58.1-801 and 58.1-802. Although the tax in question has not yet been assessed by the clerk or the department, we have treated your correspondence as an application under Va. Code §58.1-1821. The issue in this case concerns the classification of a deed for recordation tax purposes, whereby one of the owners of a parcel of land willingly purchases the interests of the co-owners in a partition suit.
Under Va. Code §58.1-806, the recordation tax for any deed of partition is fifty cents. The section does not define "deed of partition."
The department's position is that for recordation tax purposes, a deed of partition is an instrument specifying that property held jointly by two or more parties has been divided into distinct portions so that each party may hold his or her proportionate share in severalty, i.e., as a sole owner. The only consideration in the transaction is each co-owner's interest in the property. This position is consistent with the definition of a deed of partition found in Black's Law Dictionary 1009 (5th ed., 1979): "In conveyancing, [a deed of partition is] a species of primary or original conveyance between two or more joint tenants, coparceners, or tenants in common, by which they divide the lands so held among them in severalty, each taking a distinct part."
The transaction in this case appears to be an allotment of the property to one owner. The land has not been divided so that each owner takes a distinct part; instead, one owner has acquired the entire property by providing consideration other than an interest in the property (i.e., cash). The transaction resulted in partition by a deed of conveyance, similar to a deed of bargain and sale (consideration in the form of money or its equivalent is given for an owner's interest in the property), subject to the recordation taxes imposed under Va. Code §§58.1-801 and 58.1-802.
You contend that, under Va. Code §8.01-83, allotment and sale of property are treated as "co-equal" with the in-kind partition of property; therefore any deed arising from allotment and sale is a deed of partition. While you are correct that allotment and sale are available remedies in a partition suit, it is incorrect to conclude that any deed arising out of a partition suit is a deed of partition. Allotment and sale are remedies in lieu of partition, and are available only after a judicial determination that partition cannot be conveniently made. Allotment and sale are transactions that result in a partition by deed of conveyance, similar to a deed for bargain and sale. Therefore, the deed in question, resulting from an allotment of the property, is taxable under Va. Code §§58.1-801 and 58.1-802.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner