Deed Stamps and Exemptions
Deeds and Conveyances
Massachusetts General Laws, Chapter 62C, Section 50 provides that "[i]f any person liable to pay any tax neglects or refuses to pay the same after demand the amount [of the tax] . . . shall be a lien . . . upon all property . . . belonging to such person . . . ."
Massachusetts General Laws, Chapter 64D, Section 1 exacts the tax on deed transfers but Section 2 of the statute imposes the obligation to pay the same upon "the person who makes or signs the deed."
If any lien is ever to arise (after demand) based on the nonpayment of the deed transfer tax, its imposition would be upon the seller's remaining property. That is, the lien would not arise against the property transferred.
Moreover, the failure to affix the proper amount of, or any, stamps will not affect the validity of the deed itself. Moore v. Quirk, 105 Mass. 49 (1870). G.L.c. 64D, §6A.
The valuation of stamps on a deed can become important in determining the consideration paid. Since 1969 there has been a requirement that the consideration be recited in the deed, so figuring out the consideration using a formula based on the affixed stamps is not necessary. But prior to that time, when no recitation of the consideration was necessary, knowing the "formula" can be helpful. Here the information:
Federal Stamps (Required from 1932 until December 31, 1967)
Rate: $.55 per $500 of valuation
State Stamps (Required from 1952 to present)
$.55 per $500 of valuation (1/1/52 to 12/31/67)
$1.00 per $500 of consideration (1/1/68 to 1/4/93)
$2.28 per $500 of consideration (1/5/93 to present) [Rate is higher on the Cape].
REBA's Practice Standard No. 1 addresses the question of the impropriety of fabricating or changing the tax status of any particular transaction.
Tax stamps are required to be affixed to deeds, but there are exceptions to this rule.
- That are given to secure a debt (mortgage).
- To which the commonwealth, city or town, United States or any of their agencies "are a party."
The tax is imposed on the "net amount" – the consideration stated less "exclusive of the value of any lien or encumbrance remaining thereon at the time of the sale.
Also, Eno and Hovey, Massachusetts Practice - Real Estate Law with Forms, West Publishing Co., (Third Edition, 1995), §28.10 indicates that the Commissioner of Revenue has issued certain directives and rulings regarding circumstances where the tax otherwise due under Chapter 64D, Section 1 would not apply:
|Bona fide gifts.||Revenue Directive 89-16|
|Statutory mergers of corporations.||Revenue Directive 89-17|
|Lease: "A lease for ten years renewable for an additional ten years, is not taxable; a lease for 99 years is taxable.||Letter Ruling 79-52|
|Sale to Housing Authority: Taxable if to a municipal agency; not if to an agency of the Commonwealth.||Letter Ruling 80-87|
|Dissolution of Corporation: Nontaxable if real estate is conveyed to shareholders in complete dissolution.||Letter Ruling 82-82|
|Dissolution of Corporation or Mass. Business (Corporate) Trust: Nontaxable if real estate is transferred to share-holders in a complete liquidation.||Letter Ruling 84-20|
|Corporate Stock Transfer: Taxable where proprietary lease is transferred with the stock.||Letter Ruling 90-91|
|Federally Sponsored Corporation: FDIC and Resolution Trust Corporation are exempt as federal agencies. FHMC (Freddie Mac) and FNMA (Fannie Mae) are government sponsored private corporations, but are specifically exempt from taxation by Statute. 12 U.S.C.A., §1452(d); 12 U.S.C.A., §1732a(c)(2).||Revenue Directive 91-2|
Unless the parties to the deed cause the transaction to be exempt (e.g., the government or one of its agencies), Eno & Harvey also tells us in §28.11 and §28.12 that deed stamps are necessary for the following transactions:
|Foreclosure deeds, whether the successful bidder is a lender or a third party||Treas.Regs. §474361-2 which G.L.c. 64D, §1 tracks.Railroad Federal Savings & Loan Assoc. v. United States, 135 F.2nd 290 (2nd Cir. 1943).|
|Deeds in lieu of foreclosure||DOR Directive 88-18. Treas.Regs. §474361-2. Letter Ruling 83-4.|
|Transfers of beneficial trust interests if for consideration, even if not recorded||DOR Directive 95-5.|