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Mortgage Registry Tax Debt Subject to Tax

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New Loan Agreements and New Mortgages

If a debt agreed to under a loan agreement is being secured by a mortgage, the Mortgage Registry Tax (MRT) is due on the debt amount being secured. See Minnesota Statute 287.035.

Example 1: Standard Home Mortgage - New Debt

  • Mortgage 1 is recorded to secure a debt amount described in Note 1 of $500,000.

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

 

Example 2: Standard Refinancing Loan - New Debt

Mortgage 1 is recorded to secure a debt amount described in Note 1 of $500,000.  Tax is properly paid on $500,000. When the unpaid principal balance of the loan is $250,000 the mortgagor meets with their lender and signs Note 2 that describes an interest rate change and restates the unpaid balance of $250,000.

  • Note 2 pays off Note 1 and Mortgage 1 is satisfied.

  • Mortgage 2 is recorded to secure the debt amount described in Note 2 of $250,000.

 
Does the document secure a new debt or increase an existing debt? Yes  
What is the document doing? Securing $250,000 of "new" debt  
Debt subject to tax? $250,000  

 

Example 3: Amended and Restated Note and Mortgage - New Debt

Mortgage 1 is recorded to secure a debt amount described in Note 1 of $5 million. Tax is properly paid on $5 million. When the unpaid principal balance is $3 million, the mortgagor meets with their lender and signs Amended and Restated Note 1 that describes an interest rate change and an additional $2 million advance to debtor. The new unpaid principal debt is $5 million.

  • Mortgage 1 is not satisfied.

  • Amended and Restated Mortgage 1 is recorded to secure the debt amount described in Amended and Restated Note 1.

Does the document secure a new debt or increase an existing debt? Yes  
What is the document doing? Interest rate change and secures an additional $2 million  
Debt subject to tax? $2 million

 

 

 
 
 
 

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