I want to make you aware of a new change that will be going into effect on July 1st of this year. There will be an increase to the Grantor's tax that is paid by the seller in closings in Virginia. Please read below:
The Virginia General Assembly enacted a landmark transportation law (HB 2313) to raise new revenues to pay for transportation initiatives across the commonwealth, with an emphasis on funding capital projects in the Northern Virginia and Hampton Roads areas of Virginia. The law was ratified by the House and Senate on April 3, 2013.
Effective on July 1, 2013, transferors of real estate located in Northern Virginia and Hampton Roads* will be subject to an increase in the grantor's tax from 0.10% to 0.25% of the applicable purchase price, exclusive of the value of any encumbrance. Currently, the grantor's tax on transfers of property is $0.50/500.00 ($1.00/1000) this new statute imposes on the grantor an additional $1.50/1000 of value (or consideration, whichever is higher). The result is a total grantor's tax of $2.50/1,000.
Therefore, on a conveyance where the consideration is $600,000.00, the grantor's tax was $600.00. As of July 1, 2013 the grantor's tax will be $1,500.00. The increase is styled as a "Regional Congestion Relief Fee." The increase does not affect the recordation tax applicable to mortgages.
According to the Commonwealth of Virginia Department of Taxation, the Northern Virginia Area is defined at Arlington County, Fairfax County, Loudoun County, Prince William County, City of Alexandria, City of Falls Church, City of Manassas and City of Manassas Park. This will also include any incorporated towns which lie within the four counties (i.e. Leesburg, Herndon, Vienna)
The Hampton Roads area is defined as a Planning District which, as of January 1, 2013, has a population of two million or more, and has a total transit ridership of not less than 50 million riders per year.
This change will not affect my friends on the lending side, but I still wanted to make sure you were aware of this. Those that are listing real estate agents will need to let their seller's know of this increase.
This increase to the Grantor's tax in order to raise revenue for the transportation department was attempted before in 2008 and was short lived. That bill increase the tax from .1% to .5% and after six months it was determined unconstitutional and was returned to .1%. So here we are at round two. As I get more details about this change, I will make sure to pass them along. If you have any questions about this new tax increase, please feel free to contact me, I am happy to be of service.
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