Is the unpaid-principal portion refinanced by the original lender exempt from Georgia IRT when an amended deed also secures a new lender's advance?

Plain-English summary

The Georgia Department of Revenue granted a partial refund of intangible recording tax for the part of an amended deed that refinanced unpaid principal with the original lender. The claimant acknowledged that IRT was due on the separate amount advanced by a new lender.

The transaction involved two promissory notes incorporated into one amended deed: one note with the original lender and another with a new lender that supplied part of the refinancing funds. The maximum $25,000 IRT had been paid under protest when the amended deed was recorded. The claimant asked for a refund only on the portion attributed to the original lender's refinancing.

O.C.G.A. § 48-6-65(b) prevents tax on the qualifying part of a new instrument that represents an original lender's refinancing of unpaid principal when prior IRT was paid (or the prior instrument was exempt) and the new instrument states the amount of refinanced unpaid principal. The Department found that the amended deed met those conditions: it identified the original lender's advance as refinancing existing debt, stated that the outstanding principal exceeded that advance, said IRT had previously been paid on the full principal, and cited the deed book and page for the earlier recording. It therefore granted the requested partial refund.

What this means for you

Borrowers and property owners

A refinancing can contain both taxable and non-taxable pieces. In this document, the original lender's qualifying unpaid-principal refinance received the statutory treatment, while the claimant accepted that the new lender's advance was taxable.

Lenders and closing professionals

The face of the recorded instrument mattered. The amended deed stated what amount represented the original lender's refinance, confirmed the prior-tax history, and identified the previously recorded deed by book and page. Build those facts into the document rather than relying on explanations supplied only after recording.

Tax professionals

Separate the financing sources and trace each dollar. Section 48-6-65(b) applied only to the original-lender refinance of unpaid principal, not automatically to the entire amended deed. The payment was also made under protest under § 48-6-76 before the partial refund claim was considered.

Common questions

Q: Is every amount in a Georgia refinancing exempt from IRT? A: No. This refund covered the qualifying original-lender portion. The claimant acknowledged IRT was due on the amount advanced by the new lender.

Q: What did the amended deed state to support the refund? A: It identified the original lender's advance as a refinance of existing indebtedness, stated that the outstanding principal exceeded the advance, confirmed prior IRT on the full principal, and cited the earlier deed's book and page.

Q: Did the Department refund the full $25,000 paid at recording? A: The source says it granted the requested partial refund, but the actual refund amount is redacted. It does not support stating a public dollar amount.

Q: Why are there several documents labeled IRT 2022-04-22-01? A: Georgia's official archive reuses that displayed ID for different PDFs. This page covers the Refinancing document; distinguish it by the topic and original PDF URL.

Citations and references

• O.C.G.A. § 48-6-65(b)(1) (prior IRT paid or the previous instrument exempt)
• O.C.G.A. § 48-6-65(b)(2)(A) (new instrument states the refinanced unpaid principal)
• O.C.G.A. § 48-6-76 (payment under protest)

Source

• IRT/RETT search page: https://dor.georgia.gov/search-irt-rett-letter-rulings
• Topic page: https://dor.georgia.gov/refinancing
• Original PDF: https://dor.georgia.gov/document/document/georgia-letter-ruling-no-irt-2022-04-22-01-refinancingpdf/download

Original ruling text

Frank M. O’Connell

Deputy State Revenue Commissioner

Robyn A. Crittenden

State Revenue Commissioner

Georgia Department of Revenue
Office of the General Counsel
1800 Century Boulevard, N.E., Suite 15107, Atlanta, Georgia 30345

April 22, 2022

VIA: First Class Mail

RE: Intangible Recording Tax Protest and Claim for Refund for Security Deed, recorded

The Department of Revenue has carefully considered your Protest and Claim for Refund of the intangible recording tax (“IRT”) paid on the above-captioned instrument (hereinafter,

“Amended Deed”). The maximum IRT of $25,000 was paid under protest when the instrument was recorded on . You seek a partial refund in the amount of a.

As you state in your Claim for Refund, this is the second refinance of a long-held loan

between Borrowers and . The parties first refinanced the loan in a. at which time IRT in the amount of was paid on the new

indebtedness of 7”! Gi. When Borrowers sought to
refinance the agreement in [i required a
related entity to provide a portion of the refinance funds. As a result, Borrower entered into two promissory notes — one for i (the original

lender), and one for [is (the new lender). Both
notes are incorporated into the Amended Deed recorded on (EEE.

At the time of recording, the maximum amount of IRT, $25,000, was paid. You state that counsel for one of the Lenders (you do not specify which lender) required payment of the full

RE: Intangible Recording Tax Protest and Claim for Refund for Security Deed, recorded on iit

April 22, 2022
Page 2

amount of IRT until a ruling was obtained from the Department of Revenue regarding the amount of tax due. The IRT was paid under protest in accordance with O.C.G.A. § 48-6-76.

In your Claim for Refund, you acknow
on the advanced by the new lender,

ledge that IRT in the amount of | was due
| . You claim no
IRT was due on the . refinanced with the original lender,

, and seek a refund of

Section 48-6-65(b) of the Georgia Code provides:

(b) No tax shall be collected on that part of the face amount of a new instrument securing a long-term note secured by real estate which represents a refinancing by the original lender of unpaid principal on a previous instrument securing a long- term note secured by real estate if:

(1) All intangible recording tax due on the previous instrument has been paid or the previous instrument was exempt from intangible recording tax; and

(2)(A) The new instrument contains a statement of what part of its face amount represents a refinancing of unpaid principal on the previous instrument; .. .

The face of the Amended Deed contains language that aligns with the requirements of O.C.G.A. § 48-6-65(b). The language explains that (1) the rd advanced » al the original lender, constituted the refinance of existing indebtedness; (2) the outstanding principal exceeded the ry advanced; and (3) IRT was paid on the full amount of principal when previously recorded. The Amended Deed even cites the Deed Book and Page Number for the previously-recorded deed. Finally, as previously stated, the IRT was paid

under protest in accordance with O.C.G.A. § 48-6-76.

The Department hereby grants your Claim for Refund of cs | in IRT paid on the Amended Deed located at . We are providing a copy of this determination to the Clerk of County Superior Court to facilitate the refund.

Sincerely,

Demeneck Capotocte

Dominick Capotosto
Deputy General Counsel

cc: P| Clerk of Superior Court