Real Estate Math – Calculating Additional Grantor’s Tax Increases

As of July 1, 2013, parts of Virginia began to require an additional “Regional Congestion Relief Fee” as part of the Grantor’s Tax. Grantor’s Tax is the seller paid taxes to the County when transferring a property. This amount is shown on the HUD-1 on the seller side of the transaction.

Here is the language of the new increase (taken from Virginia Law):

The Regional Congestion Relief Fee will be imposed on conveyances of real estate in the Northern Virginia region, beginning July 1, 2013. The fee is imposed on the consideration or value in addition to any other required recordation taxes and fees at the rate of $0.15 per $100 or fraction thereof. The fee will be paid by the grantor at the time the deed is recorded in the local Circuit Court.

Localities in the Northern Virginia region are the Cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park, and the Counties of Arlington, Fairfax, Loudoun, and Prince William.

In order to keep your seller’s informed, you will need to know how to calculate the increase in taxes. In fact, many sellers tried to get buyers to close the last week of June in order to avoid this additional fee!

You’ll need to know a few things in order to solve this real estate math problem:

1. The rate of the fee – in this case $0.15 per $100
2. The sales price of the property

Let’s take an example of this real estate math problem:

Solution:

The solution to this real estate math problem is:

Since the rate is $0.15 per $100, this translates to 0.0015 x the Sales Price = 0.0015 x $200,000 = $300. Another way to calculate this is to first divide $200,000 by $100 and then multiple by $0.15 = $2,000 x $0.15 = $300. Mr. Calderone must pay $300 for the Regional Congestion Relief Fee.

Want more practice?

If you’d like more practice with real estate taxes, download our “125 Real Estate Math Problems Solved!” Click here to get access to 125 real estate math practice problems.