Mortgage Registry Tax Debt Subject to Tax
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
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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.
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Note 2 pays off Note 1 and Mortgage 1 is satisfied.
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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.
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Mortgage 1 is not satisfied.
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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 |
Example 4: Loan Modification
Mortgage 1 is recorded to secure a debt amount described in Note 1 of $127,301. Tax is properly paid on $127,301.
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.
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Mortgage 1 is not satisfied.
- Loan Modification Mortgage described in Modified Note 1 is recorded to secure the "new" terms and debt amount.
Example: HUD Modification Agreement
Original Principal Amount: $127,301.00
Unpaid Principal Amount: $119,156.55
New Principal Amount: $138,273.97
Capitalization Amount: $19,117.42
| Does the document secure a new debt or increase an existing debt? | Yes | |
| What is the document doing? | Securing an additional $19,117.42 of "new" debt | |
| Debt subject to tax? | $19,117.42 |
