I'm a disabled veteran and my home is exempt from Virginia real estate tax — shouldn't the recordation tax on the deed when I bought it be exempt too?

Plain-English summary

A disabled veteran bought real property and paid the state and local recordation tax when the deed was recorded with the clerk of the local circuit court. He then asked for a refund, arguing the deed should have been exempt because he is a disabled veteran — pointing to Va. Code § 58.1-3219.5, which exempts the principal residence of a disabled veteran from real property tax.

The Tax Commissioner denied the refund. The reasoning:

• The recordation tax applies unless a statute says otherwise. Va. Code § 58.1-801 imposes the state recordation tax on deeds — "except deed[s] exempt from taxation by law" — at 25¢ per $100 (or fraction) of the greater of the consideration or the actual value conveyed. A city or county may add a local recordation tax of one-third of the state tax (§ 58.1-814).
• The exemption list doesn't include this. The deeds exempt from recordation tax are listed in Va. Code § 58.1-811, and that section provides no exemption for a deed conveying real estate that is a disabled veteran's primary residence.
• Exemptions are construed strictly. Because they are legislative grants, exemption statutes must be strictly construed against the taxpayer and in favor of the taxing authority (Howell's Motor Freight, Inc. v. Virginia Dep't of Taxation, Roanoke Cir. Ct. 1983).
• The real property tax exemption is a different tax. The recordation tax "is not a tax on property but rather a tax on the civil privilege of using the state's registration laws" (23 VAC 10-320-10; Pocahontas Consolidated Collieries Co. v. Commonwealth, 113 Va. 108, 112 (1912)). So the § 58.1-3219.5 exemption from real property tax on a disabled veteran's principal residence simply doesn't reach the recordation tax on the deed that conveys it.

The Department closed by saying it empathizes with the taxpayer's circumstances and greatly appreciates his service, but it cannot grant an exemption that is not set forth in the law.

What this means for you

Disabled veterans buying a home in Virginia

Virginia's disabled-veteran property tax relief (§ 58.1-3219.5) is real and valuable — but it applies to the annual real estate tax on your principal residence, administered by your locality. It does not exempt the one-time recordation tax paid when your purchase deed is recorded. Budget for recordation tax at closing like any other buyer, unless a specific § 58.1-811 exemption fits your deed.

Anyone claiming a recordation tax exemption

The controlling question is always: is this deed on the § 58.1-811 list? Analogies to other tax exemptions — however sympathetic — don't transfer, because the recordation tax is an excise on using the state's registration system, not a tax on the property itself, and exemption statutes are read narrowly against the taxpayer.

Practitioners

This ruling is a clean illustration of two doctrines working together: strict construction of exemptions (Howell's Motor Freight) and the privilege-tax character of the recordation tax (Pocahontas Consolidated Collieries; 23 VAC 10-320-10). An exemption from one tax type does not imply an exemption from another absent express statutory language.

Common questions

Q: My home is exempt from real estate tax under the disabled-veteran provision. Why did I still owe recordation tax on the deed?
A: Because they're different taxes. The real property tax exemption in § 58.1-3219.5 covers the annual tax on the property. The recordation tax is a separate excise on recording the deed, with its own exemption list (§ 58.1-811) — and that list has no disabled-veteran exemption.

Q: Isn't the recordation tax basically a property tax, since it's measured by the property's value?
A: No. Virginia authority going back to 1912 (Pocahontas Consolidated Collieries) treats it as a tax on the civil privilege of using the state's registration laws; the property's value is only the measuring stick (23 VAC 10-320-10).

Q: Could the Department have granted relief anyway, given the circumstances?
A: No. The ruling says expressly that while the Department empathizes and appreciates the taxpayer's service, it cannot grant an exemption not set forth in the law. Adding a recordation exemption for disabled veterans would take action by the General Assembly.

Q: Who collects the recordation tax, and what was at stake here?
A: The clerk of the circuit court where the deed is recorded determines and collects it — the state tax at 25¢ per $100 on the greater of the consideration or actual value, plus up to one-third more as local tax if the city or county imposes it.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-1821 — administrative appeal (application for correction) to the Tax Commissioner
• Va. Code § 58.1-801 — state recordation tax (25¢/$100 on the greater of consideration or actual value), "except deed[s] exempt from taxation by law"
• Va. Code § 58.1-814 — optional local recordation tax of one-third the state tax
• Va. Code § 58.1-811 — the exclusive list of deeds exempt from the § 58.1-801 tax
• Va. Code § 58.1-3219.5 — real property tax exemption for a disabled veteran's principal residence (held not to extend to recordation tax)
• 23 VAC 10-320-10 — the recordation tax is a tax on the civil privilege of using the state's registration laws

Authorities the Department relied on (described here, not linked): Howell's Motor Freight, Inc., et al. v. Virginia Dep't of Taxation, No. 82-0846 (Roanoke Cir. Ct. Oct. 27, 1983) (exemptions strictly construed against the taxpayer); Pocahontas Consolidated Collieries Co., Inc. v. Commonwealth, 113 Va. 108, 112 (1912) (recordation tax is a privilege tax, not a property tax).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-42

Original ruling text

April 3, 2025

Re: § 58.1-1821 Application: Recordation Tax

Dear *:

This will respond to your letter in which you request a refund of state and local recordation taxes paid by * (the “Taxpayer”) for recording a deed.

FACTS

The Taxpayer purchased real property and paid state and local recordation tax to record the deed with the clerk of the local circuit court. The Taxpayer requests a refund of the tax paid, contending the deed was exempt from the tax because he was a disabled veteran.

DETERMINATION

Virginia Code § 58.1-800 et seq ., imposes the state tax on the recordation of documents relating to real estate transactions. A recordation tax is imposed on any instrument admitted to record unless otherwise exempt by statute. Under Virginia Code § 58.1-801, a state recordation tax is imposed on deeds, “except deed[s] exempt from taxation by law,” of 25¢ on every $100 or fraction thereof of the consideration or the actual value of the property conveyed, whichever is greater. Any city or county may impose a recordation tax equal to 1/3 of the amount of state recordation tax. See Virginia Code § 58.1-814.

By reason of their character as legislative grants, statutes relating to exemptions allowable in computing income and credits allowed against a tax liability must be strictly construed against the taxpayer and in favor of the taxing authority. See Howell’s Motor Freight, Inc., et al. v. Virginia Dep’t of Taxation , No. 82-0846 (Roanoke Cir. Ct. Oct. 27, 1983). Virginia Code § 58.1-811 sets forth the deeds that are exempt from the tax imposed by Virginia Code § 58.1-801. That section does not provide an exemption for a deed conveying real estate where the real estate is the primary residence of a disabled veteran.

The Taxpayer believes that because Virginia Code § 58.1-3219.5 exempts the principal residence of a disabled veteran from real property tax, the deed conveying such property should also be exempt from recordation tax. The recordation tax, however, is not a tax on property but rather a tax on the civil privilege of using the state’s registration laws. See Title 23 of the Virginia Administrative Code (VAC) 10-320-10. See also Pocahontas Consol. Collieries Co., Inc. v. Commonwealth, 113 Va. 108, 112 (1912).

While the Department empathizes with the Taxpayer’s circumstances and greatly appreciates his service to our country, the Department cannot grant an exemption that is not set forth in the law. Accordingly, the requested refund cannot be granted.

The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at or **.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR/4939.X