An investor in Virginia purchases a distressed property at a foreclosure sale conducted by the trustee under a deed of trust for $210,000. The investor immediately resells the property six months later for $310,000 to a retail buyer. Regarding Virginia's recordation and transfer taxes, which of the following statements is most accurate?
Correct Answer
B) The investor's purchase at foreclosure and the subsequent resale are both subject to Virginia's recordation and grantor's taxes based on their respective consideration amounts
In Virginia, a trustee's deed recorded after a non-judicial foreclosure sale is subject to recordation tax based on the foreclosure sale price under Va. Code § 58.1-801, because the consideration paid at the foreclosure sale constitutes taxable consideration. The subsequent resale is also a fully taxable conveyance. Both transactions are independent taxable events based on their own consideration amounts. Virginia's non-judicial foreclosure process does not create a tax exemption for the trustee's deed.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The cost approach estimates a property's value by calculating the current cost to rebuild the improvements, subtracting accumulated depreciation, and adding the land value. It is most reliable for new construction and special-purpose properties.
Depreciation is an accounting method of allocating the cost of an asset over its useful life, allowing investors to deduct a portion of the asset's cost each year.
Highest and best use is an appraisal concept that identifies the most profitable, legally permitted, physically possible, and financially feasible use of a property. It is the foundation of all property valuation.
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