The city taxed my foreclosure deed's recordation on the property's assessed value, but I paid less than that — can other evidence of the real value lower the recordation tax?

Plain-English summary

A buyer at a foreclosure sale presented its deed to a Virginia city for recording. The city's clerk computed the recordation tax on the property's current assessed value; the buyer appealed under Va. Code § 58.1-1821, arguing the tax should be based on the consideration it actually paid — which, it said, was the property's value — and backed the claim with three broker's opinions of value (BOVs) matching the foreclosure price. The Tax Commissioner sent the case back to the clerk to review the valuation in light of that evidence.

How the recordation tax works (for this deed, recorded before the 2024 law change):

• The state recordation tax is 25¢ per $100 (or fraction) of the greater of the consideration or the actual value of the property conveyed (Va. Code § 58.1-801).
• A city or county may add a local recordation tax of one-third of the state tax (§ 58.1-814).
• The grantor's tax adds 50¢ per $500, exclusive of liens remaining at sale, on the same greater-of base, split equally between state and locality (§ 58.1-802).
• The circuit court clerk where the deed is first offered determines and collects the tax, and may ascertain consideration and actual value "by inquiry, affidavit, declaration or other extrinsic evidence acceptable to the clerk" (§ 58.1-812 B).

Assessed value is a strong starting point — not a straitjacket. Because Virginia law requires local real estate assessments to be made at 100% of fair market value (§ 58.1-3201), a recent assessment carries a strong presumption of accuracy (Shoosmith Bros., Inc. v. County of Chesterfield; Tidewater Psychiatric Institute v. City of Virginia Beach; P.D. 88-317). But the clerk is not required to use the assessed value to the exclusion of other reliable information: if a clear preponderance of the evidence shows the assessment doesn't reflect fair market value as of the transaction date, the clerk has authority to rely on that evidence instead (P.D. 00-97, 06-77, 11-191, 15-205, 21-109) — and where the assessment isn't recent, the clerk should look further.

Valuation is the clerk's call — but it must be an informed one. Valuing real estate is a factual determination best made by someone familiar with the property and local market (P.D. 91-146); the Department defers to the clerk unless the valuation appears unreasonable, and mere disagreement isn't enough. Here, rather than overriding the clerk, the Department forwarded the ruling to the City's clerk with a request to review the property's actual value considering all relevant, reliable information — including the taxpayer's BOVs. If the review supports a lower value, the Department will refund the state portion of the tax and the City will refund the local portion.

The rule has since changed. For deeds recorded on or after July 1, 2024, House Bill 574 (Chapter 140, 2024 Acts of Assembly) amended § 58.1-801 A to define the "value of the property conveyed" as the most recent property tax assessment at the time of conveyance. For newer recordings, the assessment is the value — the alternative-evidence path this ruling describes applies only to pre-July 2024 recordings.

What this means for you

Buyers at foreclosure or below-assessment sales (pre-July 2024 recordings)

If you recorded a deed before July 1, 2024 and the recordation tax was computed on an assessed value well above what the property was actually worth at the sale, this ruling shows the path: present the clerk (or the Department on appeal) with clear, reliable valuation evidence — appraisals, BOVs, the arm's-length sale price — showing fair market value on the transaction date. The clerk can, and where the assessment is stale should, look past the assessment.

Anyone recording deeds today

For deeds recorded on or after July 1, 2024, the statute now fixes "value" at the most recent property tax assessment — so the greater-of comparison runs between your consideration and that assessment, and BOV-style evidence no longer moves the recordation tax. Plan the tax cost accordingly, including in foreclosure and distressed-sale contexts.

Refund mechanics

The state and local recordation taxes travel together but refund separately: the Department refunds the state portion, the locality the local portion. Expect the clerk's valuation review to drive both.

Common questions

Q: The clerk used the assessed value. Isn't that final?
A: For pre-July 2024 recordings, no. The assessment enjoys a strong presumption of accuracy, but the clerk may accept other reliable extrinsic evidence, and if a clear preponderance shows the assessment didn't reflect fair market value on the transaction date, the clerk can base the tax on that evidence.

Q: What evidence did the taxpayer use here?
A: Three broker's opinions of value, each valuing the property at the amount the taxpayer paid at the foreclosure sale. The Department directed the clerk to consider them in reviewing the value.

Q: Did the taxpayer win?
A: Partially. The Department didn't order a refund outright — valuation is the clerk's factual determination and gets deference — but it formally requested the clerk review the value considering the BOVs, with a state-tax refund to follow if a lower value is warranted (and a local-tax refund from the City).

Q: Does this ruling still matter after the 2024 amendment?
A: Mostly for older recordings and pending disputes. For deeds recorded on or after July 1, 2024, § 58.1-801 A now defines the property's value as its most recent property tax assessment, which removes the alternative-evidence question for new recordings.

Citations and references

Statutes:

• Va. Code § 58.1-1821 — administrative appeal (application for correction) to the Tax Commissioner
• Va. Code § 58.1-801 — the state recordation tax (25¢/$100 on the greater of consideration or actual value); as amended by House Bill 574, Chapter 140, 2024 Acts of Assembly, effective July 1, 2024 (value = most recent property tax assessment)
• Va. Code § 58.1-814 — optional local recordation tax of one-third the state tax
• Va. Code § 58.1-802 — the grantor's tax (50¢/$500, split state/locality)
• Va. Code § 58.1-812 B — the clerk determines and collects the tax; extrinsic-evidence authority
• Va. Code § 58.1-3201 — local assessments at 100% of fair market value

Authorities the Department relied on (described here, not linked): Shoosmith Bros., Inc. v. County of Chesterfield, 268 Va. 241 (2004), and Tidewater Psychiatric Institute, Inc. v. City of Virginia Beach, 256 Va. 136 (1998) (assessed value's strong presumption); P.D. 88-317 (11/10/1988) (recent assessments presumed to reflect actual value); P.D. 91-146 (8/2/1991) (valuation is the clerk's factual determination); P.D. 00-97, 06-77, 11-191, 15-205, and 21-109 (clerks may rely on other reliable evidence of value).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-43

Original ruling text

April 3, 2025

Re: § 58.1-1821 Application: Recordation Tax

Dear *:

This will reply 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 presented a deed for recordation to * (the “City”) resulting from a foreclosure sale. The City assessed recordation tax based on the current assessed value of the property.

The Taxpayer appeals, contending that the tax should have been based on the consideration paid, which was equal to the property’s value. In support of its position, the Taxpayer has presented three broker’s opinions of value (BOV) that valued the subject property at an amount equal to the consideration paid by the Taxpayer at the foreclosure sale.

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 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. Pursuant to Virginia Code § 58.1-802, an additional grantor’s tax of 50¢ on every $500 or fraction thereof, exclusive of any lien or encumbrance remaining thereon at the time of the sale, is imposed on the greater of the actual value of the property conveyed or the consideration of the sale. The grantor's tax is divided equally between the state and the locality.

Virginia Code § 58.1-812 B provides that:

The tax on every deed, deed of trust, contract or other instrument shall be determined and collected by the clerk in whose office the instrument is first offered for recordation. The clerk may ascertain the consideration of the deed or of the instrument, the actual value of the property conveyed, and the qualification of the deed or instrument for any exemption claimed by inquiry, affidavit, declaration or other extrinsic evidence acceptable to the clerk.

In this case, the Taxpayer contends that the three BOVs represent the best indication of the fair market value for purposes of the recordation tax. The assessed value is accorded a strong presumption of accuracy in determining fair market value. See Shoosmith Bros., Inc. v. County of Chesterfield , 268 Va. 241 (2004) and Tidewater Psychiatric Institute, Inc. v. City of Virginia Beach, 256 Va. 136 (1998). A clerk of a circuit court is not required to use the assessed value to the exclusion of other reliable information as to the current fair market value. If it can be shown by a clear preponderance of the evidence why the assessed value does not reflect fair market value as of the date of the transaction, the clerk has the authority to rely on such evidence to determine the proper amount of the recordation tax. See Public Document (P.D.) 00-97 (5/26/2000), P.D. 06-77 (8/23/2006), P.D. 11-191 (11/30/2011), P.D. 15-205 (10/20/2015), and P.D. 21-109 (8/24/2021).

Placing a value on real estate is entirely a factual determination that is best made by one who is thoroughly familiar with the property itself and local market conditions. This responsibility lies with the clerk when the value must be determined for recordation tax purposes. See P.D. 91-146 (8/2/1991). The Department will defer to a clerk’s determination of a property’s value unless the clerk’s valuation appears unreasonable. The mere fact that a taxpayer disagrees with a clerk’s valuation is not sufficient to show it is unreasonable.

Because Virginia Code § 58.1-3201 requires all assessments of real estate for purposes of local property taxation to be made at 100% of fair market value, it is reasonable for a clerk to presume that a recent assessment reflects the actual value of the property. See P.D. 88-317 (11/10/1988). Where the clerk has reason to believe that the assessed value does not reflect the actual value ( e.g ., the assessment is not recent), the clerk should seek other evidence of the actual value.

The Department will send a copy of this letter to the Clerk of the City and request a review of the determination of the actual value of the property, taking into consideration available relevant and reliable information, including the BOVs provided by the Taxpayer. When the City informs the Department of the correct fair market value, the Department will refund the appropriate amount of state recordation tax if warranted. A refund of the local recordation tax would then be issued by the City.

This determination is consistent with the Department’s longstanding policy that clerks have the authority to rely on additional evidence of fair market value. The parties should be aware, however, that effective for deeds recorded on or after July 1, 2024, House Bill 574, Chapter 140 of the 2024 Acts of Assembly, amended the Virginia Recordation Tax Act to define “value of the property conveyed” and “value of the interest” as the most recent property tax assessment for such property at the time the property is conveyed. See Virginia Code § 58.1-801 A.

The Code of Virginia sections cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. 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/5003.X

.

Related Documents

88-317

91-146

00-97

06-77

11-191

15-205

21-109