Mortgage Registry Tax Examples

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

 

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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

 

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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

 

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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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Example 5: Loan Modification - Capitalization of Interest  

Mortgage 1 is recorded to secure a debt amount described in Note 1 for $100,000.  Tax is properly paid on $100,000.

After two years, the borrower begins to fall behind on their payments.  In order to bring the loan back into “good” standing, the lender and borrower agree to modify their agreement and take the borrowers past due amounts and add them to the unpaid principal balance.  Mortgagor signs Modified Note 1.

• Mortgage 1 is not satisfied
• Loan Modification Mortgage 1 is recorded to secure the "new" terms and debt amount described in Modified Note 1

Original Principal Amount:     $100,000
Unpaid Principal Amount:      $90,000
New Principal Amount:           $95,000
Capitalization Amount:           $5,000

 

QUESTION	ANSWER
Does the document secure a new debt or increase an existing debt?	Yes
What is the document doing?	Securing $5,000 of new debt
What amount of debt is subject to tax?	$5,000

                       

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