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Mortgage Registration Tax Examples

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Example 1: Standard Home Loan-New Note, New Debt

Mortgage 1 is recorded securing a promissory note (Note 1) in the amount of $500,000.   

Question Answer
Does the document secure a new debt or increase an existing debt? Yes
What is the document doing? Securing $500,000 of new debt
What amount of debt is subject to tax? $500,000

 


Example 2: Standard Refinancing Loan – New Debt

Mortgage 1 is recorded securing a promissory note (Note 1) in the amount of  $500,000. Tax is paid on $500,000. When the unpaid principal balance of the loan is $250,000, the mortgagor signs a second promissory note (Note 2) in the amount of $250,000.

  • Note 2 pays off Note 1, and Mortgage 1 is satisfied
  • Mortgage 2 is recorded securing Note 2 
Question Answer
Does the document secure a new debt or increase an existing debt? Yes
What is the document doing? Securing $250,000 of new debt
What amount of debt is subject to tax? $250,000

 


Example 3: Supplemental Mortgage – Existing Debt Increased  

Mortgage 1 is recorded securing a promissory note (Note 1) in the amount of $5,000,000. Tax is properly paid on $5,000,000. When the unpaid principal balance is $2,500,000, the mortgagor signs a second promissory note (Amended Note 1), which amends Note 1 and describes an additional advance of $2,500,000.

  • Note 1 is not paid off, and Mortgage 1 is not satisfied
  • Supplemental Mortgage 1 is recorded securing Amended Note 1
Question Answer
Does the document secure a new debt or increase an existing debt? Yes
What is the document doing? Securing $2,500,000 of additional debt
What amount of debt is subject to tax? $2,500,000

 


Example 4: Modified Mortgage – New Debt 

Mortgage 1 is recorded securing a promissory note (Note 1) in the amount of $5,000,000. Tax is properly paid on $5,000,000. When the unpaid principal balance is $2,500,000, the mortgagor signs a second promissory note (Note 2) in the amount of $5,000,000.

  • Note 2 pays off Note 1 and advances $2,500,000 to the mortgagor
  • Modified Mortgage 1 is recorded securing Note 2
Question Answer
Does the document secure a new debt or increase an existing debt? Yes
What is the document doing? Securing $5,000,000 of new debt
What amount of debt is subject to tax? $5,000,000

 

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