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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 320. Recordation Tax Regulations
11/23/2024

23VAC10-320-80. Contracts generally; leases.

A. Examples of contracts and leases taxable under § 58.1-807 of the Code of Virginia:

1. The assignment of an overriding royalty interest. The term "royalty interest" generally refers to a right to share in the production of oil and gas at severance; it is personal property and relates to the proceeds from oil and gas leases if and when there is production. A "royalty" is not realty but personalty and a contract entirely separate and distinct from the oil and gas lease, which contract requires the owner of the interest in realty to share a portion of the royalty with another. The royalty interest does not run with the land.

2. The recordation tax under § 58.1-807 of the Code of Virginia on options is measured by the consideration given for the option and not by the value of the property involved.

3. An agreement not to encumber or transfer property is a contract relating to real property. The tax would be imposed upon the unpaid principal and interest of the note or notes.

4. An amended lease which increases the original monthly payments. The tax is based on the difference or the increase in the monthly payments.

5. A lease and a contract of sale when both agreements are contained in a single document. This type of document contains more than one type of contract, and the recordation tax is imposed upon each contract; i.e., the lease and the contract of sale.

B. Example of contracts and leases not taxable under § 58.1-807 of the Code of Virginia:

1. An assignment of a lease on which the recordation tax has been previously paid is generally not subject to tax under the provisions of § 58.1-807 of the Code of Virginia if there is no increase in the amount of the principal obligation.

Statutory Authority

§§ 58.1-203 and 58.1-807 of the Code of Virginia.

Historical Notes

Derived from VR630-14-807, eff. January 1, 1985.

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