General Guidelines for Obtaining Exemption from Property Recordation and Transfer Tax
There are a variety of factors that impact upon whether or not a specific property owned by a foreign mission or international organization in the United States is eligible for an exemption from real estate taxes. Such determinations initially require knowledge of whether the property is owned by a foreign government or international organization and if so, how these entities will use the property.
The following information is meant to inform the reader of the primary, or most common, basis through which a foreign mission or international organization’s property may be eligible for an exemption from real estate taxes, which include both annual property taxes and recordation/transfer taxes.
Recordation and Transfer Taxes
Based on the purchase price of a property, the recordation tax is normally paid by the purchaser at the time the title is officially recorded by the local jurisdiction. The Office of Foreign Missions will adjudicate recordation and transfer tax exemption upon mission’s request for approval of the purchase or sale from OFM.
If the Department determines that the property is entitled to exemption, OFM will provide the Embassy with a letter addressed to the appropriate taxing authority that the Embassy can present at settlement. The request from the Office of Foreign Missions is normally sufficient to exempt the mission from paying the recordation tax.
Based on the sales price of a property, the transfer tax is normally paid by the seller at the time a property is sold. If a foreign mission is the seller the same procedure applicable to recordation taxes should be followed.