Elena is purchasing a foreclosed property in Worcester from a lender (mortgagee) via a foreclosure deed for $275,000. Her attorney advises her that the deed excise tax situation for this transaction differs from a standard sale. Which of the following correctly describes the deed excise tax treatment for this foreclosure deed transfer?
Correct Answer
C) The lender's transfer of the foreclosure deed to Elena is exempt from deed excise tax, but if Elena later resells the property, her sale will be fully subject to the tax
Under MGL Chapter 64D, the transfer of property by a mortgagee (lender) to a purchaser at a foreclosure sale is exempt from the deed excise tax. This exemption applies to the lender's conveyance of the foreclosure deed. However, this exemption is specific to the foreclosure transfer itself. When Elena subsequently sells the property as a standard market transaction, that sale will be fully subject to the Massachusetts deed excise tax at $2.28 per $500 of consideration, with Elena as the seller (grantor) bearing the obligation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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